Energy X-Ray Trading Company KZN (Pty) Ltd and Another v Sanyati Building (Pty) Ltd and Others (4062/11) [2011] ZAKZDHC 56 (30 November 2011)

In the KwaZulu-Natal High Court, Durban

Republic of South Africa

Case No :4062/11

In the matter between :

Energy X-Ray Trading Company KZN (Pty) Ltd …....................................First Applicant

Africa X-Ray Industrial & Medical (Pty) Ltd …......................................Second Applicant

and

Sanyati Building (Pty) Ltd …..................................................................First Respondent

The Red Ants Maintenance & Construction CC …...........................Second Respondent

The Provincial Administration of KZN

Department of Works …........................................................................Third Respondent

Judgment

Lopes J

[1] The first applicant seeks an order declaring it to be the owner of the X-ray machinery and accessories described in an annexure to the founding affidavit (‘the equipment’) together with an order that the first respondent deliver the equipment within five days of the date of the order to the first applicant’s rented warehouse in Durban. Alternative relief is sought that the Sheriff be authorised to attach and deliver the equipment in the event that the first respondent fails to comply with the order. Costs are sought.

[2] The applicants seek relief only against the first respondent. I shall refer to the parties in this judgment as Energy X-Ray (first applicant), Africa X-Ray (second applicant), Sanyati (first respondent) and The Red Ants (second respondent). I shall also refer to the applicants collectively as ‘the applicants’, and to the third respondent as such.

[3] The applicants’ cause of action may be summarised as follows :-

Africa X-Ray is a company which imports various types of medical equipment into the Republic of South Africa; and

Energy X-Ray is an associated company which trades in the sale of the medical equipment imported by Africa X-Ray;

in August of 2009 The Red Ants asked Energy X-Ray to provide a quote for the sale and supply of various types of medical X-ray equipment and related accessories as described in the papers;

The Red Ants had apparently concluded an agreement with Sanyati to sell that equipment to, and instal it on behalf of, Sanyati;

Africa X-Ray was able to provide some of the equipment needed from stock, and the balance had to be imported specifically for the project;

Africa X-Ray imported the necessary equipment and made payment for it in full. The submission is that at that stage Africa X-Ray became the owner of the equipment;

Energy X-Ray then purchased the equipment from Africa X-Ray on a rand for rand basis; and

an agreement was concluded between Energy X-Ray and The Red Ants for the sale of the equipment during or about October and November of 2009, and Energy-X-Ray was to deliver the equipment and instal it at the Park Rynie mortuary, 271 Smith Street, Park Rynie, KwaZulu-Natal;

The Red Ants were to pay an amount of R898 509,41 to Energy X-Ray for the equipment, by way a R200 000 deposit with the balance being paid in due course. Provision was made in the agreement for a reservation of ownership of the goods in Energy X-Ray, with the stipulation that ownership would only pass to The Red Ants on payment of the full purchase price;

Energy X-Ray also undertook to assist The Red Ants in completing an application form for the required licence in terms of the provisions of s 4 of the Hazardous Substances Act, 1973 (‘the Act’) to permit the use of an X-ray device;

Energy X-Ray provided the equipment and delivered it to the Park Rynie mortuary , but it could only be installed once the licence in terms of s 4 of the Act had been issued;

The Red Ants, in breach of the agreement with Energy X-Ray failed to make payment of the full purchase price. The only reason given for non-payment was that it had not in turn been paid by Sanyati;

various assurances were given by representatives of The Red Ants that payment would be made the moment that Sanyati paid The Red Ants, but it is common cause that payment has never been made to Energy X-Ray;

there was also at that time a problem with the installation of the equipment at the Park Rynie mortuary, because the relevant s 4 licence could not be obtained;

eventually because of the difficulties (for technical reasons) in obtaining the s 4 licence, the third respondent considered removing the equipment from the Park Rynie mortuary to the Gale Street mortuary in Durban. That mortuary could accommodate the equipment because it already had a valid s 4 licence. Energy X-Ray and The Red Ants agreed that because the equipment would no longer be installed by Energy X-Ray at the Park Rynie mortuary, The Red Ants would be credited with the installation costs in the sum of R25 000 plus VAT;

on the 1st June 2010 and at the request of the third respondent, Energy X-Ray obtained and provided to the third respondent a quote in the sum of approximately R100 000 for the transportation of the equipment from the Park Rynie mortuary to the Gale Street mortuary, for the alterations to the Gale Street mortuary X-ray room, and for the installation of the equipment there;

on the 2nd July 2010 The Red Ants paid the deposit required to Energy X-Ray in the sum of R200 000;

representatives of The Red Ants contacted the representatives of Energy X-Ray in August 2010 and intimated that the Red Ants were not being paid by Sanyati and that they feared that they would not be paid. The advise from the attorneys acting for The Red Ants was allegedly that an agreement should be concluded that Energy X-Ray would uplift the equipment and return it to its own storage facility and that the deposit paid by The Red Ants would be set off as liquidated damages for the additional costs occurred by Energy X-Ray in warehousing and transporting the equipment;

on the 14th of September the equipment was collected on the instructions of Energy X-Ray;

these arrangements were confirmed in a letter dated the 29th of September 2010 sent to the attorneys acting for Africa X-Ray and a copy was sent to Mr O’Connor of Sanyati who is reflected as the Park Rynie Mortuary Project Manager;

on the 1st of October 2010 Sanyati’s attorneys demanded that the equipment be returned, failing which a spoliation application would be brought against Energy X-Ray. That application was delivered in due course, and resulted in the grant of a spoliation order dated the 1st November 2010;

pursuant to the order the equipment was returned to the Park Rynie mortuary on the 9th of November 2010;

Energy X-Ray then continued with the present application after requesting Sanyati to admit that they did not pay The Red Ants and that the ownership in and to the equipment stored vested in Energy X-Ray. That request was not responded to.

[4] The defences raised by Sanyati to the vindicatory application were :-

that it had paid for the equipment in full, and taken delivery and transfer of ownership from The Red Ants in the bona fide belief that The Red Ants had the right to transfer ownership in and to the equipment;

Sanyati called upon The Red Ants to assist in its defence against Energy X-Ray and notified The Red Ants that should Energy X-Ray succeed in the vindicatory application, it would seek damages including the return of the purchase price from The Red Ants; and

Sanyati has what it refers to as ‘serious doubts’ about the claim of Energy X-Ray that it reserved ownership in and to the equipment when it sold it to The Red Ants. Sanyati accordingly requires the matter to be referred for the hearing of oral evidence on this issue.

[5] It is clear from the opposing affidavit of Sanyati that it concluded an agreement with The Red Ants in terms of which The Red Ants were to supply and instal the equipment. It alleges that it was part of that agreement that once the equipment had been delivered on site, it would become the property of the third respondent. The suggestion is made that Energy X-Ray must have known that ownership of the equipment will be transferred by The Red Ants to Sanyati, who would in turn transfer ownership to the third respondent.

[6] It is not clear to me how this conclusion can be drawn because had the above taken place, it would have been necessary that The Red Ants acquired ownership in and to the equipment. As Sanyati professes to have no knowledge of the contractual arrangements concluded between Africa X-Ray, Energy X-Ray and The Red Ants, in my view there is no real, genuine or bona fide dispute of fact raised in this regard as envisaged in Plascon-Evan Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (AD) at 634 E – 635 C.

[7] This rule discussed in Wightman t/a J W Construction v Headfour (Pty) Ltd and another [2008] ZASCA 6; 2008 (3) SA 371 (SCA), para 13 where Heher JA stated:-

‘A real, genuine and bona fide dispute of fact can exist only where the court is satisfied that the party who purports to raise the dispute has in his affidavit seriously and unambiguously addressed the fact said to be disputed. There will of course be instances where a bare denial meets the requirement because there is no other way open to the disputing party and nothing more can therefore be expected of him. But even that may not be sufficient if the fact averred lies purely within the knowledge of the averring party and no basis is laid for disputing the veracity or accuracy of the averment. When the facts averred are such that the disputing party must necessarily possess knowledge of them and be able to provide an answer (or countervailing evidence) if they be not true or accurate but, instead of doing so, rests his case on a bare or ambiguous denial the court will generally have difficulty in finding that the test is satisfied. I say “generally” because factual averments seldom stand apart from a broader matrix of circumstances all of which needs to be borne in mind when arriving at a decision. ... There is thus a serious duty imposed upon a legal adviser who settles an answering affidavit to ascertain and engage with facts which his client disputes and to reflect such disputes fully and accurately in the answering affidavit. If that does not happen it should come as no surprise that the court takes a robust view of the matter.’

[8] Mr Bingham, who appeared for Sanyati drew my attention to a number of aspects of the documentation put up by the applicants demonstrating the importation of the equipment by Africa X-Ray. The suggestion is that these documents do not demonstrate that the equipment was purchased, and that ownership could not have vested in, Africa X-Ray in the first place.

[9] However, it is clear from the documents that Africa X-Ray and Energy X-Ray work together to ensure the importation and distribution of the equipment. The order confirmation from Energy X-Ray to The Red Ants clearly incorporates a reservation of ownership clause. There is no doubt that Energy X-Ray sold the equipment to The Red Ants. Sanyati admits to having had a contract to purchase it from The Red Ants.

.

[10] The reservation of ownership is referred to in a number of documents including :-

(a) a letter by the representative of Energy X-Ray under the guise of Natal Imaging Services for the upliftment and transportation of the equipment from the Park Rynie mortuary to the Gale Street mortuary, which quotation was addressed to the third respondent and dated the 9th of June, 2010; and

(b) a letter addressed by the attorneys acting for Energy X-Ray to the attorney acting for The Red Ants wherein reference is made to the reservation of ownership in their agreement. This was copied to Sanyati during or about September 2010. The reply to that letter dated the 1st of October 2010 makes no challenge to the reservation of ownership, but instead addresses only the question of the spoliation. That matter is again addressed in a letter to Sanyati’s attorneys dated the 6th of October 2010. Once again the reply dated the 6th of October does not deal with the issue of reservation of ownership. Later correspondence dealing with the reservation of ownership was not replied to.

[11] Although these letters are well after the conclusion of the various contracts, they negate any suggestion of recent fabrication of the reservation of ownership claim. In these circumstances I am not persuaded that Sanyati has raised a genuine, real and bona fide dispute of fact with regard to the ownership of the equipment by Energy X-Ray. That reservation of ownership must trump any subsequent dealings between The Red Ants and Sanyati.

[12] With regard to the doubts expressed by Sanyati about the existence of a reservation clause in the contract between Energy X-Ray and The Red Ants, I am satisfied that, on a balance of probabilities, such a reservation clause did exist. The only matter then left to be answered is whether the applicants are estopped from claiming under the rei vindicatio.

[13] A party who wishes to rely on estoppel must plead it and prove the essentials required.

See : Absa Bank Ltd v I W Blumberg and Wilkinson [1997] ZASCA 15; 1997 (3) SA 669 (SCA) at 677 H.

In this matter it would be necessary for Sanyati to demonstrate that a representative of the applicants made a representation to Sanyati that The Red Ants was the owner of the property or entitled to dispose of it. See : Info Plus v Scheelke and another [1998] ZASCA 21; 1998 (3) SA 184 (SCA) at 194 F – G. That representation could have been made by words or conduct. As there is no allegation in the answering affidavits of a clear and unequivocal oral representation by any representative of the applicants, it is necessary to look at their conduct. The test for a representation by conduct is whether someone in the position of the applicants should reasonably have expected that Sanyati would be misled by the conduct of the representatives of the applicants and that the representatives of Sanyati acted reasonably in understanding the representation in the sense in which they did.

See : Concor Holdings (Pty) Ltd t/a Concor Technicrete v Potgieter 2004 (6) SA 491 (SCA) at 495 B – F

[14] The allegations in the answering affidavit are confined to the conduct of The Red Ants and Sanyati, together with an allegation that the applicants must have known that ownership in the equipment would be transferred by The Red Ants to Sanyati who would in turn transfer ownership to the third respondent. How the representatives of the applicants did so, is not made clear, particularly when Energy X-Ray relies on the express reservation of ownership, of which the representatives of The Red Ants would certainly have been aware. The representation which may have induced the representatives of Sanyati to believe that they had acquired ownership in and to the equipment which they had passed on to the third respondent could only have come from The Red Ants.

[15] The only behaviour then in favour of Sanyati which remains to be considered is whether the fact that the applicants sold the equipment to The Red Ants knowing that it would ultimately be acquired by the third respondent constituted a representation which would have entitled Sanyati (and the third respondent) to believe that ownership in and to the equipment would pass to those parties.

[16] Given the requirement that the applicants assist The Red Ants in the obtaining of the necessary s 4 licence it must be accepted that all parties knew of the involvement of the applicants and that they were the source of the equipment. A reservation of ownership is not an unusual stipulation in a commercial contract. Indeed, it is a wise precaution taken by a commercial entity which parts with expensive equipment, and for which it is not immediately to be paid in full therefor.

[17] I do not believe that it was reasonable for representatives of Sanyati to suppose, on those facts alone, that ownership in the equipment passed to it upon payment to The Red Ants simply because it was a term of the contract between Sanyati and the third respondent that Sanyati would transfer ownership of the equipment to the third respondent. There is no evidence before me that this is something of which the applicants were aware. In those circumstances the test set out above has not been satisfied.

[18] Accordingly I grant an order in terms of prayers 1, 2 and 3 of the Applicants Notice of Motion dated the 30th of March 2011. The First Respondent is to pay the costs of the application.

Date of hearing : 11th November 2011

Date of judgment : 30th November 2011

Counsel for the Applicants : A D Collingwood (instructed by Gavin Price Attorneys)

Counsel for the Respondents : M Bingham (instructed by Norton Rose Incorporated)