Cooper and Others v Dabbs and Another (92/2003) [2004] ZANWHC 29 (1 November 2004)

CASE NO. 92/2003

IN THE HIGH COURT OF SOUTH AFRICA

(BOPHATHATSWANA PROVINCIAL DIVISION)

In the matter between:

BRIAN ST CLAIR COOPER 1ST APPELLANT

BLESSING GCABASHE 2ND APPELLANT

FERDINAND ZONDACH N N O 3RD APPELLANT

And

JOHN DABBS 1ST RESPONDENT

W & P AVIATION C C 2ND RESPONDENT

___________________________________________________________________

JUDGMENT

MOGOENG JP.

[1] This is an appeal against a decision of Landman AJ ordering the Appellants to release the aircraft attached by them to the Respondent, with costs. The appeal is with the leave of the Court a quo. The question which now arises for determination is whether Landman AJ was correct in finding that the Respondent had proved ownership of the aircraft by himself and in making the consequent order. There is also the issue of costs.

[2] The three Appellants (Respondents in the Court a quo) are the Joint Final Judicial Managers of the North West Development Corporation (Pty) Ltd, a company under final judicial management with limited liability, duly incorporated in terms of an Extraordinary Provincial Gazette No. 5350 with its registered address situated at Development House, University Drive, Mmabatho, and are prosecuting this appeal in their aforesaid capacity. (The Appellants were also cited in their official capacity in the Court a quo). The Respondent (Appellant in the Court a quo) is an American national who for some time prior to the proceedings in the Court a quo was resident in Zimbabwe but had since returned to the United States of America at the time of institution of the proceedings. The parties will be referred to as they are on appeal.

The Facts

[3] On 13 May 1997 the Respondent entered into a written agreement of purchase and sale with W & P Aviation CC (“W&P”), represented by one Sue van den Brink, in terms of which W&P would build him an aircraft, the Zenair CH 701 Sky Jeep (“the aircraft”). The Respondent made an initial payment as a deposit. It was agreed that the balance or, in the words of the Respondent, full purchase price would be paid at a later stage. It was effect through a bank transfer on 19 May 1997, prior to the completion of the aircraft.

The date of delivery of the aircraft agreed upon by the parties, which was entered into the agreement by W&P was to be 31 August 1997. Physical delivery was contemplated by the parties and it was to be made Free on Board (“FOB”) at W&P’s place of business. It is imperative to set out the relevant clause of the agreement dealing with delivery:

“4. OTHER CONDITIONS

i) Delivery and Transport

The Sale is made F.O.B. vendor’s place of business, and upon delivery of the Zenair CH 701 “Sky Jeep” to the carrier of First Carrier, all risks of loss or damage shall thereafter be assumed by purchaser and delivery shall be deemed to have taken place. Purchaser may personally pick up the “Sky Jeep”, provided he so advises the vendor at the time of executing his purchase order and takes possession thereof within fifteen (15) days following the receipt of vendor’s notice that it is ready for delivery . . .

ii) Date of Delivery and Discharge of Liability

Upon accepting this purchase order vendor undertakes to deliver the Zenair CH 701 “Sky Jeep” to purchaser no later than the date vendor shall have entered on the purchase order, purchaser expressly empowering vendor to make such inscription in his name, provided that the said date is within the delivery delays specified in the latest list published by vendor and in effect at the time of accepting this purchase order. Such delivery delays shall be automatically extended for a number of days equivalent or any time period during which the vendor shall have been prevented, either directly or indirectly, by reasons to tally or partially beyond its control from delivering the Zenair CH 701 “Sky Jeep” . . .”

[4] In terms of clause 5(ii) of the Agreement, ‘ . . . no amendment to any of the provisions herein contained shall be valid or become effective unless it has been stated and accepted in writing by the vendor and the purchaser.’ According to Nick Downie (“Downie”), a former member of W&R, in an e-mail sent by himself to one Shirley, the Respondent’s cousin in Johannesburg, W & P started encountering problems with the Respondent as early as 06 June 1997, regarding the aircraft.

(Copies of the e-mail were annexed to the papers and both parties relied thereupon, and the admissibility thereof is assumed for purposes of this judgment.

[5] Downie stated further that the aircraft could not be delivered to the Respondent on the agreed date, i.e. 31 August 1997. The cause of the delay was that the engine mount supplied to W&P by the parent company in the USA, Zenair, had been wrongfully manufactured. There were reasons as well for the delay on the side of W&P, such as that W&P was then a very new and a very small company and had problems with skilled staff. The Respondent deposed in his founding affidavit that the date of delivery was, by mutual agreement it would seem, deferred. However, what the deferred date was to be is unclear, and in fact, the Respondent did not specify. It would seem that this happened also when the Respondent was still in Zimbabwe.

[6] Eventually, the dust settled and the aircraft was completed. It had then to be tested, however testing was not permitted without registration. Registration had to be done in the name of the owner of the aircraft. By virtue of the distance between himself and W&P, the Respondent arranged with W&P for the latter to register the aircraft in its own name, this W&P did and a copy of the registration certificate was annexed to the papers.

[7] The aircraft had then to be delivered. By this time, however, the Respondent had already returned to the USA. According to the Respondent, in his founding affidavit, he realised that the shipping of the aircraft to the USA would not economically viable. He then negotiated with Downie that W&P would look for a purchaser for the aircraft on his behalf. The Respondent even intended cancelling the agreement, an intention he made known to W&P in an e-mail, but was rejected by the latter. W&P was not prepared to refund the Respondent the full purchase price, instead, it was prepared to assist him as far as possible to get it sold. W&P was also prepared to buy back the aircraft from the Respondent, but this was, according to Downie, just a ‘gentlemen’s agreement’. It is worth mentioning that at all material times W&P considered itself divested of the ownership of the aircraft and considered it to belong to the Respondent, and it (W&P) could not dispose of it without his consent. W&P did not succeed in selling the aircraft, as to which see the next paragraph.

[8] As already indicated, the North West Development Corporation (“the NWDC”) is a company under final judicial management and the Appellants are its Joint Final Judicial Managers. The Appellants are entrusted with the responsibility of ensuring the re-acquisition of the assets belonging to the NWDC. The NWDC had, prior to coming under final judicial management, advanced a loan to W&P. At the time when the NWDC came under final judicial management, W&P had not discharged the repayment of the loan. It later transpired to the Appellants that W&P could not discharge its liability. The Appellants then caused the representatives of NWDC to visit the premises of W&P in order to ascertain the movable assets owned by the latter, this the representatives of NWDC did. This was apparently done with a view to later attach these assets and sell them in execution in order to satisfy the loan. Pursuant to an order of this Court obtained by the Appellants under Case No. 16/2002, the Deputy Sheriff, on 01 February 2002, attached the movable assets belonging to W&P, the aircraft was among these assets and this was the reason why W&P did not succeed in selling it.

[9] Subsequent to the attachment, the Respondent’s attorney, Mr Wissing, informed the Appellants’ attorneys that the aircraft did not belong to W&P, but to the Respondent. According to Sue van den Brink, also a former member of W&P and a deponent to an affidavit in support of the Respondent’s case, the representatives of NWDC were also made aware of this fact when they visited W&P’s premises, that is prior to the attachment. The Respondent’s attorney’s protestations fell on deaf ears. To rue salt to injury, the Appellant’s attorneys informed the Respondent’s attorney that the Appellants contemplated selling the aircraft in execution. The Appellants were of the view that the Respondent had failed to prove delivery of the ownership of the aircraft to himself. This led to the proceedings in the Court a quo and the present appeal.

The Law

[10] In Marcard Stein & Co v Port Marine Contractors (Pry) Ltd & Another [1995] ZASCA 76; 1995 (3) SA 663 (A); Corbett J, reaffirming the principle stated by himself in Lendalease Finance (Pty) Ltd v Corporation De Mercadeo Agricola & Another 1976 (4) SA 464 (A) at 489H-490A, said the following in relation to the passing of ownership in corporeal movable property, at 667B:

“It is a fundamental principle of our common law that ownership in corporeal movable property cannot pass by virtue of a contract of sale alone: there must, in addition, be at least proper delivery of the contract goods to the purchaser.”

Delivery of the contract goods need not necessarily be physical, it may also be constructive or fictitious. Therefore, the mere fact that the purchaser did not come into physical possession of the contract goods is no bar the passing of ownership therein if there had been a fictitious delivery of the contract goods in one of the recognised modes by our law (See Universal Group Ltd t/a Island View Shipping Co v The Fund Created by the Sale of the MV Maharani, Ex MN Claire Tsavliris, & Another 1990 (2) SA 480 (N) at 490E-F). One of the modes of fictitious delivery recognised by our law, which is relevant for a determination of this appeal, is delivery by way of constitutum possessorium.

[11] The requirements for delivery by way of constitutum possessorium have been stated by Jansen JA in Mankowitz v Loewanthal 1982 (3) SA 758 (A) at 766B-G as follows:

“The absence ‘of physical prehension’ by the transferee is, however, no obstacle to a delivery by way of constitutum possessorium. By agreeing to and intending thenceforth to hold the res on behalf of the transferee, the possessor ceases to possess and commences to hold as agent for the transferee, who, by intending to possess through the transfer, now becomes a possessor. The requisites for a constitutum, based on Schorer (AD De Groot’s Introbuition. 2 48. 28), are stated by Solomon JA in Goldinger’s Trustee v Whitelaw & Son 1917 AD 66 at 85 as follows:

‘(1) That the grantor be himself in possession of the things to be transferred; (2) That he cease to possess in his own name and begin to possess for another; (3) The consent of the grantee; and (4) Some causa or Justus titulus.’

For present purposes (2) and (3) are of crucial importance: There must be an agreement to the effect that the transferor henceforth holds on behalf of the transferee. This requires at least some external manifestation of the transferor’s intention. A declaration by the transferor to the following effect would make the matter clear: Quod meo nomine possideo, constituto me possidere alieno nominee, or constituto me possidere alieno nomine.

According to Savigny the intention

‘Must . . . necessarily be expressly declared, or necessarily follow from the other circumstances of the case.’

(On possession s 29 – translation by Kelleher.) He states that a contitum is not to be presumed and it is clear that he only infers the intention ‘from the other circumstances of the case’ where there is some other transaction entitling the transferor to remain a holder, e.g. where he ‘gives a thing as a gift, and at the same time hires it’. (CF Lauterbach AD B 412 3 18.) This is consonant with Schorer requiring a causa or Justus titulus – A causa betentionis for the transferor. It is from the existence of this transaction that the transferor’s intention to hold on behalf of the transferee is inferred.”

[12] It is clear that the sale agreement and the delivery pursuant to it are separate juristic acts. Therefore, the intention of the seller alone to hold the property on behalf of the purchaser is not sufficient to pass ownership to the latter. The purchaser must also agree to the transaction. In the Universal Group case (supra) Thirion J stated the following principles:

“The agreement of sale and the delivery pursuant to it are separate juristic acts. Where delivery takes the form of a constitutum possessorium the agreement (consensus) that the transferor would henceforth hold on behalf of the transferee, which is a requisite for this form of delivery, is separate from the agreement directed at creating the sale. Savigny on possession s 29 makes this clear:

‘For the contract, which states the transfer of the property, a purchase for instance, is very different from a constitutum: The latter contains a declaration that the previous possessor intends to be an agent for the possession of another, which declaration is neither contained in a mere contract of purchase, nor is generally to be implied, it must therefore be expressly declared or necessarily follow from the other circumstances of the case.’

(Perry’s translation at 237)

While in a constitutum possessorium the intention to transfer ownership may be inferred from the circumstances of the case, the intention simpliciter to transfer ownership is not enough – The intention must be that the transferor will henceforth hold the thing as detentor on behalf of the transferee under a new contractual relationship. Not only therefore must there be agreement between the transferor and transferee that the transferor will henceforth hold the thing as detentor on behalf of the transferee, but there must be a distinct causa detentionis for doing so. Innes CJ demonstrates these two requirements in the example given in Goldinger’s Trustee v Whitelaw & Son 1971 AD 66 at 75:

‘If A, after selling a movable to B, were to determine to hold it on behalf of the latter, that change of mind would not effect a transfer of ownership. There must be a clearly proved contractual relationship under which he becomes the detentor for the purchaser. Only in such a case would the doctrine of constitutum possessorium operate to pass the property by a kind of fictitious delivery.’ ”

[13] The onus of proving constitutum possessorium is on a party alleging it. As can be seen from the preceding discussion, the onus is not simple. The Courts often approach allegations of constitutum possessorium with suspicion, especially where the rights of third parties are affected. It is easy for fraud to be committed on third parties. Therefore, conclusive proof on the change of ownership is required. See Wessels, The Law of Contract in South Africa 2nd ed vol. 1 para. 2060.

Counsel’s Submission and Application of the Law to the Facts

[14] Mr Lever SC, for the Appellants, opened his argument by stating that the Appellants do not dispute the bona fides of W&P and the Respondent when concluding the sale agreement. This concession was wisely made, for there is nothing suspicious about the sale agreement. However, Mr Lever submitted, the Appellants disputed the passing of ownership of the aircraft to the Respondent so as to entitle him to claim it from the Appellants. The Respondent, Mr Lever continued, failed to allege in his founding affidavit that he ever took delivery of the aircraft. Therefore, the Respondent’s allegations lacked averments necessary to sustain a cause of action. If this submission is anything to go by, it boggles the mind why the Appellants did not take an exception at the pleading stage. It also boggles the mind why Mr Lever did not raise a point in limine in the Court a quo. (These were cheaper options available to the Appellants to resolve the dispute.) For these reasons, the argument based on the lack of averments necessary to sustain a cause of action fails.

[15] Mr Lever further submitted that the Respondent failed to mention in his founding affidavit that delivery had taken place by way of constitutum possessorium. If we understood Mr Lever’s argument correctly, the Respondent should have specifically pleaded contitutum possessorium. We do not think that this should be the enquiry. The enquiry should be whether on the facts alleged by the Respondent in his founding affidavit, delivery by way of constitutum possessorium was proved. As shall be seen later, we are of the view that this question should be answered in the affirmation.

[16] Mr Lever further submitted that, even if it were to be accepted that delivery by way of constitutum possessorium had taken place, it was ineffectual since the sale agreement provided that delivery should take place physically and the parties could not vary it, except in writing. W&P and the Respondent had not reduced, to writing, the fact that delivery would take place by way of contitutum possessorium. He also submitted that delivery by way of constitutum possessorium should, as stated earlier, be treated with caution since fraud on the rights of third parties was easy under this mode of delivery. Mr Pistor, for the Respondent, countered the first submission by arguing that it was not for the Appellants to tell W&P and the Respondent that they were wrong in not varying the sale agreement in writing. To buttress his argument, he referred the Court to a passage in Allssenkehr Farms (Pty) Ltd v Trio Transport CC 2002 (4) SA 483 (SCA). Similarly in that case, the written cession agreement between the Respondent and another party contained a provision to the effect that it could only be varied in writing. The parties varied the agreement orally. The Appellant contended that this variation was invalid as it had to be in writing. Dismissing the Appellant’s contention Lewis AJA, as she then was, writing for the majority, held as follows at 493I and 494A:

“ . . . , where the parties have agreed that the cession will be extinguished when the overdraft ceases to exist, it should not be open to the defendant to argue that the re-cession must be in writing in order for it to take effect . . . , if the parties were not contending that a written termination was needed, it was not open to the defendant to argue invalidity of the act.”

[17] We endorse Mr Pistor’s argument. As regards the argument based on fraud, we did not understand Mr Lever to suggest that there was fraud on the part of W&P and the Respondent. On the contrary, we hold that there was no such fraud.

[18] Mr Lever also argued that the Respondent’s conduct after the conclusion of the sale agreement was not indicative of someone who wanted to take delivery of the aircraft. W&P, he argued, could not force the Respondent to accept delivery and ownership of the aircraft. This argument is without merit. We are not called upon to decide the Respondent’s conduct. As Mr Pistor correctly submitted, the Respondent’s conduct is irrelevant in the determination of whether ownership of the aircraft passed to him, what is of relevance is whether delivery (if there was any) took place prior to the day of the attachment of the aircraft. In the Lendaleasecase (supra), Corbett JA, as he then was, stated the following in the context of the facts in that case at 490G-H and 491A:

“ . . . , the basic enquiry is whether it was established by Lendalease that as at 12 June the cargo of maize had been delivered to CMA with the intention to passing the ownership thereof to CMA.”

[19] It remains to consider whether ownership had passed to the Respondent by way of constitutum possessorium prior to the attachment of the aircraft. In answering this question one should consider the following facts: the Respondent returned to the USA and could not take physical delivery of the aircraft; the shipping of the aircraft to the USA was not economically viable; the Respondent intended to cancel the contract but W&P refused the cancellation and was not prepared to refund the Respondent the full purchase price; the Respondent stood to lose his money, something which he would obviously not have liked to see happening; the Respondent authorised W&P to register the aircraft in its own name and later to sell it on his behalf; W&P accepted the authorisation and no longer considered itself the owner of the aircraft and could not dispose of it without the Respondent’s consent. The Appellants never disputed these facts or allegations. Taken cumulatively, the facts evince that delivery by way of consitutum possessorium did take place. There was the intention on the part of the Respondent that W&P should henceforth continue to hold the aircraft on his behalf and, similarly, there was the intention on the part of W&P to hold it on the Respondent’s behalf. The selling of the aircraft by W&P on behalf of the Respondent constituted the necessary causa detentionis. We hold, therefore, that Landman AJ was correct in finding that the Respondent had proved ownership of the aircraft by himself on a balance of the probabilities and in making the consequent order.

Costs

[20] The principle governing costs is that they follow the result. There is no reason why this Court should depart from this principle in this case. The Respondent is, therefore, entitled to the costs of the appeal. Landman AJ reserved the costs of the application for leave to appeal. These costs were made dependent on the outcome of the appeal. Since the Appellants are the unsuccessful parties, it follows that they should also be ordered to pay the costs of the application for leave to appeal.

Order

[21] In the result, the appeal is dismissed with costs, including the costs of the application for leave to appeal.

_________________

M.T.R. MOGOENG

JUDGE PRESIDENT OF THE HIGH COURT

I agree

______________

B.E. NKABINDE

JUDGE OF THE HIGH COURT

______________________

R.D. MOKGOATLHENG

ACTING JUDGE OF THE HIGH COURT

APPEARANCES

DATE OF HEARING : 20 AUGUST 2004

DATE OF JUDGEMENT : 00 NOVEMBER 2004

ATTORNEYS FOR THE APPELLANTS : SMIT & STANTON INC.

ATTORNEYS FOR THE RESPONDENTS : NIENABER & WISSING

COUNSEL FOR THE APPELLANTS : ADV H. LEVER SC

COUNSEL FOR THE RESPONDENTS : ADV J.H.F. PISTOR