Nedbank v Ilanga Automotive (Pty) Ltd t/a Citroen Centurion and Others (61907/2019) [2021] ZAGPPHC 855 (26 November 2021)

IN THE HIGH COURT OF SOUTH AFRICA

GAUTENG DIVISION, PRETORIA

Case No: 61907/2019

REPORTABLE: NO

OF INTEREST TO OTHER JUDGES: NO

REVISED: YES

DATE 20/11/2021

In the matter between:

NEDBANK

(Registration Number: 1951/000009/06)

Plaintiff

and

ILANGA AUTOMOTIVE (PTY) LTD

t/a CITROËN CENTURION

First Defendant

LANGA, BHEKI SIBUSIZO

Second Defendant

IYALOO, PRIVIN

Third Defendant

LABUSCHAGNE AJ

JUDGMENT

[1] This is a summary judgment application by Nedbank against the first and second defendants based on a Master Sale Agreement, an individual sale of a motor vehicle and a deed of suretyship.

[2] A plea was filed by the first and second. During September 2021 notice was given of an intention to supplement the plea. The amendment has not gone through. Although the first and second defendants (hereafter "the defendants") filed affidavits resisting summary judgment, they failed to timeously file heads of argument or a practice note.

[3] An application to compel the filing of heads was brought and the first respondent consented to an order directing it to file its heads and practice note during July 2021. It failed to do so. The hearing

was scheduled for 15 November 2021. On the eve of the hearing counsel for the Applicant received belated heads and a practice note from the legal representatives of the first and second respondents. There was no condonation application for non-compliance with the court order of July. There was no condonation application for the late filing of papers in this application. The Court's displeasure at the conduct of the legal representatives of the first and second respondents in failing to comply heads and practice note on Caselines and failing to apply for condonation is reflected in the cost order below.

[4] Nedbank and the first defendant entered into a written Master Sale and Representation Agreement on 23 February 2016 at Sinoville, which agreement formed the backdrop of subsequent individual sales of motor vehicles and goods which Nedbank bought from the first defendant and financed and leased to consumers who purchased these goods from the first defendant.

[5] This application relates to the sale of a motor vehicle by the first defendant to the third defendant.

[6] In terms of the Master Sale and Representation Agreement, the first defendant was contractually obliged as against Nedbank (unless otherwise agreed in writing) to procure that Nedbank be registered as the Title Holder of the relevant goods prior to Nedbank effecting payment on the purchase price. The only exception was where registration was delayed due to problems with the eNaTIS system. In this instance there was no such delay, and the parties did not agree otherwise.

[7] The contract contained a 21-day breach clause pertaining to any essential provision of an Individual Sale Agreement. The Master Sale agreement also has a 21-day breach notice provision. If the breach constituted a repudiation of the Individual Sale Agreement concerned, no notice calling for a remedying of such breach would be necessary.

[8] At the time of concluding the aforesaid Master Sale Agreement, the second defendant bound himself as surety and co-principal debtor for all the first defendant's obligations to Nedbank.

[9] On 16 August 2016 Nedbank, as credit provider, sold a Mercedes­ Benz S600L motor vehicle to the third defendant for a financed amount of R819,052.06, of which R692,982.50 constituted the purchase price.

The vehicle was to be paid off in monthly instalments over 72 months.

[10] The aforesaid vehicle was sourced from the first defendant in terms of the Master Sale and Representation Agreement.

[11] The first defendant failed to procure that Nedbank was registered as the Title Holder of the vehicle prior to payment of the purchase price. When the third defendant defaulted on his payments, the plaintiff ascertained that it had no title to the vehicle due to the aforesaid breach by the first defendant. On the pleadings the breach is admitted.

[12] The plaintiff paid the purchase price to the first defendant.

[13] The plaintiff found out that it was not the owner of the vehicle in February 2017. By then the third defendant had defaulted on his repayments. A breach notice was sent to the first defendant on 13 September 2017 and the purchase price paid was reclaimed. If not paid within 21 days Nedbank would exercise its remedies, which included cancellation of the agreement of sale.

[14] The first defendant failed to rectify the breach. A repudiation is pleaded as an alternative to the breach. The only relevance is that, if the breach notice annexed to the particulars of claim as "POC6" is defective, then the repudiation would render a breach notice unnecessary.

[15] A plea was filed (and the proposed amendment) and opposing papers were filed in the summary judgment application, which raise the following as defences:

15.1 An arbitration clause in the Master Sale Agreement concluded between Nedbank and the first defendant;

15.2 Failure to comply with the 21-day breach clause;

15.3 Fraud by the third defendant and a partner of the second defendant in respect of the transaction.

[16] The first and second defendants' first defence in its plea is that of arbitration. They plead that Clause 13 of the Master Sale and Representation Agreement states that any dispute arising from or in connection with the agreement and/or any Individual Sale Agreement shall be resolved by arbitration as facilitated by Absa.

[17] The second defendant is not a party to the agreement in which the alleged arbitration clause appears. Arbitration is therefore not a defence that the second defendant can raise.

[18] Clause 13.1 of the Master Sale Agreement provides as follows:

"13.1 Any disputes arising from or in connection with this Agreement and/or any Individual Sale Agreement shall, if so required by either party by giving written notice to that effect to the other, be finally resolved in accordance with the Rules of the Arbitration Foundation of Southern Africa by an arbitrator or arbitrators appointed by Absa. There shall be no right of appeal as provided for in Article 22 of the aforesaid rules."

[19] The first time that the issue of arbitration arose is by means of the notice of amendment of the plea, merely referring to this clause.

19.1 What triggers the arbitration would be a written notice by one party to the other referring a dispute to arbitration. The clause is formulated in permissive terms and requires arbitration "if so required by either party by giving written notice to that effect to the other". The plea of arbitration does not identify a written notice by either party referring the aforesaid matter to arbitration.

19.2 In Zhongji Development Construction Engineering Company Ltd v Kamoto Copper Company SARL [2014] ZASCA 160 the majority of the SCA held the following at par [56]:

"This court has said that parties who refer matters to arbitration 'implicitly, if not explicitly, (and subject to the limited power of the Supreme Court under Section 3(2) of the Arbitration Act), abandon the right to litigation in courts of law and accept that they will be finally found by the decision of the arbitrator."

19.3 In this matter neither party has referred the dispute to arbitration. The arbitration clause requires invocation by means of a written notice of referral. The presumption that the parties intended all of their disputes to be decided by means of arbitration is therefore dispelled by the wording of the arbitration clause.

[20] While one would be loath to undermine an arbitration clause, no valid defence has been raised in this respect.

[21] The second defence is that no valid breach notice had been delivered. Annexure "POC6" to the particulars of claim is a 21-day breach notice. The breach notice calls for payment of the amount due arising from the failure of the first defendant to procure the registration of the vehicle into the plaintiffs name prior to the plaintiff paying the purchase price of the vehicle. The breach notice is consistent with what the contract requires. The defence that it is defective has no merit.

[22] Even in the event of the breach notice being defective (which I cannot find), repudiatory conduct renders a breach notice unnecessary as it would serve no purpose.

See: Taggart v Green 1991(4) SA 121 (W);

Discovery Life Limited v Hogan and Another [2021] ZASCA 79 at par [24].

[23] The plaintiff received an invoice from the first defendant for the aforesaid motor vehicle dated 29 July 2016, reflecting a retail cash price of R692,982.50, a handing fee of R750.00, license and registration of R3,500.00, a navigation system of R17,543.86 and service and delivery in the amount of R3,070.18. Together with VAT the amount payable to the first defendant was R817,855.00. The plaintiff contends that it paid the amount of R849,532.55 to the first defendant in its particulars of claim. The vehicle was delivered to the third defendant no 16 August 2016. The amount paid is admitted (par 11.2 of the plea).

[24] The plaintiffs claim for interest in excess of the amount disbursed is a claim for the interest it would have earned in terms of the Instalment Sale Agreement with the third defendant. This part of the claimed amount represents special damages which require specific pleading regarding foreseeability and being in the contemplation of the parties when they contracted (which was not one) and which damages fall outside the ambit of summary judgment proceedings.

[25] The defendants have also contended that Nedbank did not set out the extent of repayments made by the third defendant. The Section 129 notice (annexure "POC8" to the particulars of claim) dated 15 July 2019 which Nedbank issued to the third defendant, records an arrears amount of R696,858.31. In addition, Nedbank has pleaded that the vehicle could not be retrieved from the third defendant.

[26] The defendants plead that a fraud was committed upon the first defendant by the third defendant and a Mr Soobramoney and that a case of fraud has been opened at the Wierdabrug Police Station. He purchased the vehicle from Mr Soobramoney for R760,000.00 and was provided with documentation that persuaded him that the sale was legitimate. The first defendant only became aware that something was wrong when Nedbank made enquiries at the end of September 2016 about ownership. In early 2017 the third defendant and Mr Soobramoney informed the first defendant that the vehicle had been stolen.

[27] If this defence of fraud were to be established, it would still not exonerate the first defendant from its contractual obligation to procure that the vehicle is registered in the name of Nedbank before it pays for the vehicle and before the vehicle is delivered to the purchaser.

[28] The defence of fraud therefore, to my mind, does not establish a defence as against Nedbank.

[29] In conclusion I am therefore persuaded that there is no defence disclosed in respect of the amount disbursed by Nedbank to the first defendant. Nedbank's claim for the interest that it lost in excess of the actual disbursement cannot be decided in these proceedings.

[30] In the premises I make the following order:

1. Summary judgment is granted against the first and second defendants jointly and severally, the one paying the other to be absolved, for:

1.1 Payment of R849,532.55;

1.2 Interest on the aforesaid amount at the then prescribed mora rate from 2 September 2016, being the date of payment to the first defendant, to date of final repayment;

1.3 Leave to defend is granted in respect of the balance of the claim;

1.4 Costs of the summary judgment application to be paid by the first and second defendants jointly and severally;

1.5 It is specifically ordered that the legal practitioners representing the first and second defendants may not debit their clients any fees for the purpose of preparing heads of argument, the practice note or for appearing in the summary judgment proceedings.

E. LABUSCHAGNE

ACTING JUDGE OF THE HIGH COURT

Date of Hearing: 15 November 2021

Judgment delivered: 26/11/2021

For the Plaintiff: Adv IL Posthumus

Contact no: 011 895 9000/ 082 788 6065

Email address: ian@adv21.co.za

For the Defendant: No Appearance.