G.P.-S.

59968—1970-71—2 500 J 219

In the Supreme Court of South Africa

In die Hooggeregshof van Suid-Afrika
( Provincial Division)
(.. A2£ELL*E2_ ....... .. .... Provinsiale Afdeling)

Appeal in Civil Case

Appel in Siviele Saak

.. ........... AHIS...___________ GEIKAHC®)................. ............ -........ Appellant,

versus
Ija&SSBllí SÓSLKXJHS (p/ï) LTD .Respondent

Appellant's Attorney _ . _ c Respondent's Attorney t 71

Prokureur vir Appellant......vir Respondent w

Appellant's Advocate /n k 1 IL 1 Respondent's Advocate xf "f 11 S L

Advokaat vir Appellana\Lú!^.Ji>cJ\a^^ vir Respondent....

Set down for hearing on I J ~1h 19TÍ

Op die rol geplaas vir verhoor op...

Bills taxed—Kosterekenings getakseer

Date Amount Initials

Writ issued Datum Bedrag Paraaf
Lasbrief uitgereik™

Date and initials

Datum en paraaf.
 IN THE SUPREME COURT OF SOUTH AFRICA

(APPELLATE DIVISION)

In the matter between:

ARIS ENTERPRISES (FINANCE) (PROPRIETARY) LIMITED .... APPELLANT

AND

WATERBERG KOELKAMERS (PROPRIETARY) LIMITED .......... RESPONDENT

Coram: Trollip, Muller, HoPmeyr and Kotzé, JJ.A. et Joubert, A.J.A.

Heard: 19 November 1976. Delivered; February 1977*

judgment

TROLLIP, J.A. :

In the Transvaal Provincial Division the

appellant (plaintiPP) claimed Prom respondent (dePendant) the

return op (a) a Carma deep Preezer, (b) a Sumak rePrigerator,

and .... /2
 2

and (c) 4 Crolls air-conditioning units. The basis of the

claims was that plaintiff had let (a), (b), and (c) to defendant

for 3 years for use in its butcher shop in Nylstroom under three

separate written agreements of lease, dated respectively 20

October 1969, 20 October 1969, and 1 November 1969, and that the

leases had expired by effluxion of time. Originally the claims

were made by application on notice of motion. Defendant opposed

the application. The Court a quo referred the matter to trial.

It also ordered that the plaintiff’s affidavit supporting the

notice of motion was to stand as summons and that the other

pleadings were to be filed in due course. The trial was ulti­

mately heard by COETZEE, J. He granted absolution from the

instance on the claims for (a) and (b), but judgment for the

plaintiff in respect of (c), and he ordered plaintiff to pay

90% .... /3
 3

90% of defendant’s costs of suit* Plaintiff has appealed against

the judgment of absolution and the order of costs. There is

no cross-appeal against the judgment in respect of (c). We are

therefore only concerned with the claims for (a) and (b).

The lease for (a) provided that the total

rental was R756, payable in equal monthly rentals of R21 over

36 months commencing on 20 October 1969« The lease for (b)

stated that the total rental was R2 880, payable in equal monthly

rentals of R80 over 36 months also commencing on 20 October 1969.

Each lease contained the following terms -

«9. The Lessee agrees that on the termination of this

agreement, whether by effluxion of time or for any

other cause, he will at his own expense deliver to the

Lessor the goods in good order and condition together
with all licence papers, registration certificates and

any other relevant documents in possession of the

Lessee .... /4
 4

Lessee at that time, or hold the goods on behalf of

the Lessor pending instructions from the Lessor in
respect of delivery thereof.

10. 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 herein­
before mentioned 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 all

costs incurred by the Lessor in connection or
incidental to the repossession, storage, repair

and sale of the goods, and

(b) If all rentals, costs and other charges herein­
before 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, plus any costs incurred by the

Lessor in connection with or incidental to the

repossession, storage, repair and sale of the

goods less the proceeds of the aforesaid sale.”

Plaintiff duly delivered and installed the

appliances .... /5
 5

appliances (a) and (b) in defendant’s butcher shop; defendant

duly paid all the stipulated rentals; and the leases expired

by effluxion of time. The defendant, however, has refused to

return the appliances to plaintiff in terms of the above

clauses. In the proceedings claiming their return defendant

raised various defences. They can be summarized as follows:

(i) At the time the leases were entered into, Jacobs,

the sole director and shareholder of defendant, and Kondopulos,

a director of plaintiff, verbally agreed that on expiry of the

leases plaintiff would not physically take back the appliances,

they would remain in defendant’s possession, and Jacobs, or any

company in which he had an interest, could, in terms of the

abovementioned clause 10, purchase them at a nominal price,

which would then be paid over to defendant.

----- (ii) .... /6

 6

(ii) The common and actual intention of the parties at.

the time of entering into the leases was that, on due payment

by defendant of all the so-called rentals, it (defendant) would

become the owner of the appliances; that the true agreements

between them were therefore hire-purchase contracts, disguised

so as to evade the provisions of the Hire-Purchase Act, No. 36

of 1942; and that the leases should therefore be treated as

accordingly rectified.

(iii) Alternatively to (ii), the defendant pleaded the

exceptio doli. The basis of this defence was that, because

of the verbal agreement of the parties alleged in paragraph (i)

above, it was mala fide and unconscionable of plaintiff to

invoke and enforce by these legal proceedings the provisions of

clauses 9 and 10 of the leases according to their strict tenor.

At .... /7 _
 7

At the trial the defence in paragraph (ii)

was abandoned by defendant. The reason was, so counsel informed

us, that, even if the verbal agreement or the common intention of

the parties alleged in paragraphs (i) and (ii) were established,

that did not render the leases hire-purchase contracts, since

Jacobs or his nominee, and not defendant, would then, in accord­

ance therewith, become the ultimate owner of the appliances.

Hence, defendant relied only on paragraphs (i) and (iii).

COETZEE, J., preferred the testimony of Jacobs

to that of Kondopulos. He said that the former was "a simple

and straightforward man", he was "an honest and truthful witness",

his version was "infinitely more probable than that of Kondopulos",

and where their versions conflicted, he accepted Jacobs’s.

He therefore held that in substance the verbal agreement

alleged..... /8 _
 8

alleged in paragraph (i) had been established. As to the

except io doli, the learned Judge recorded his strong view that

it did not form part of our law, but, he said, he was bound

by the decision or assumption by the Kull Bench of the Transvaal

Provincial Division in Otto en n Ander v. Heymans 1971 (4) S.A.

148 to the contrary. On the supposition that the exceptio

doli still prevails in our law, he considered that the present

case was a clear one for its application. He consequently

absolved defendant from the claims for the return of the 2

appliances in question.

On the view we take of the facts it becomes

unnecessary, for reasons that follow, for us to enter upon the

interesting dispute about whether or not the except io doli

is still available in our law.

Counsel .... /9
 9

Counsel for plaintiff criticized the acceptance

by the Court a quo of Jacobs’s version. But I am unpersuaded

that it erred in doing so except on one particular aspect (about

to be mentioned) on which Kondopulos* s version is clearly far

more probable than Jacobs’s. \

According to Jacobs he wanted to acquire these

appliances on hire-purchase contracts; but Kondopulos explained

that the plaintiff had also a leasing scheme available that

had the advantage of avoiding the need to pay an initial, sub­

stantial deposit on account of the purchase price; he was there­

fore persuaded to enter into the two leases. He (Tacobs)

denied (as Kondopulos asserted) that they also discussed the

further advantage that the monthly rentals would be deductible

expenses for income tax purposes. But, I think, that must

also .... /10

 10

also have-featured in their discussion, being so powerful an

argument in favour of such leases; indeed, according to

defendant’s subsequent financial accounts returned for income

tax purposes, these rentals were shown as deductions. Jacobs

naturally asked Kondopulos what would happen to the appliances

on the expiration of the leases, since he was anxious that he or

defendant should then retain them. Kondopulos proposed that he

could take them over for "a nominal amount" according to a

valuation which plaintiff and Jacobs would make and agree upon,

which amount Jacobs had to pay over to the defendant. Jacobs,

acting both for himself and defendant, agreed to that proposal.

That the valuation of and their concurrence

upon "the nominal amount" and the payment of it to defendant

were fundamental to Jacobs’s entitlement to retain or acquire

.. the \ /11.
 11

the appliances, appears from the following passages in his evi-

dence (the reference to "Industrial and Mercantile” can be taken

to mean the plaintiff, and "Waterberg Koelkamers” is the defendant):

”Nou goed, laat ek nou woord vir woord hoor wat sê hy?....

Mnr. Kondopulos het aan my gesê dat die goedere, die manier

wat hulle dit werk, ná die tydperk verstreke is, moet daar -n

waardasie gemaak word van die yskaste. Dit sal n nominale

bedrag wees, dit kon enige bedrag wees .... ek kan die
yskaste dan op my eie naam sit en ek moet net daardie bedrag
oorbetaal aan Waterberg Koelkamers .....
Wat kan oorbetaal word aan Waterberg Koelkamers?....
Die waardasie wat ons op ooreenkom of die bedrag wat ons
ooreenkom .... (Ek betaal dit) in my privaat persoon .....

U het vertel dat Kondopulos sê vir u daar moet eers sekere

dinge gedoen word? .... Ja, dit is net die kwessie van die
betaling van my aan Waterberg Koelkamers en dan is die saak

af gehandel.
Daar word eers m waardasie gemaak? .... Dit is reg.
Wie maak die waardasie? .... Industrial Mercantile en ek

sal ooreenkom op m bedrag.

Het hy dit ook gesê? .... Dit is reg.

Dan stel ek die vraag weer aan u: Met ander woorde hy

het vir u beduie, wat ek nou maar noem, sekere prosedures wat
Julie moet ooreenkom op *n bedrag, n waardasie maak en sulke

dinge .... /12

 12

dinge. Dit moet eers gebeur voordat die goed u eiendom kan
word?..., Dit is reg.

Dit is nie m geval dat hy gesê het; as u klaar betaal

het oor 36 maande dan is dit u eiendom nie? ... Dit is reg.

Is daar enige nominale betaling gemaak deur uself hetsy

aan Waterberg Koelkamers of aan die eiser? .... Daar is nie

gemaak nie, want volgens wat Industrial Mercantile aan my ge-

stel het, moes ons saam n waardasie maak van die goedere.
Ek kon nie alleen sê wel, goed, ek betaal R100-00 of R200-00
oor nie.

So u en Industrial Mercantile sou saam m waardasie gemaak

het? .... Dit is reg.
En as gevolg daarvan, wat sou dan gebeur?.... Dan sou die
goedere my eiendom gewees het. •
Teen daardie prys?.... Teen die bedrag wat ons op ooreen-
gekom het."

From further passages in Jacobs’s evidence it appears

that, provided the valuation was made and "the nominal amount" was

agreed upon and the amount was paid over to defendant, then either

Jacobs, defendant, or some other company nominated by him could

retain .... /13

 13

retain possession of the appliances. - ...

For plaintiff it was contended that the evi­

dence of that contemporaneous verbal agreement was inadmissible

as being contrary to the express provisions in clauses 9 and

10 of the leases quoted above. For defendant it was argued

that the verbal agreement was not contrary but complementary

to those provisions and evidence of it was therefore admissible.

The purpose of the verbal agreement, so it was argued, was to

implement clauses 9 and 10 in a particular manner: on termina­

tion of the leases, instead of defendant having to return

the appliances to plaintiff for it to sell them to anyone it

chose and to pay the net proceeds to defendant, plaintiff

would sell them to Jacobs for a price to be evaluated and agreed

upon between plaintiff and Jacobs and he (Jacobs) would pay

- . . ____ ----- ---- that .... /14

 14

that price to defendant. It is, however, unnecessary to

determine whether or not the verbal agreement conflicted with

clauses 9 and 10. I shall assume without deciding in favour

of defendant that it did not, and that parol evidence of it

was therefore admissible.

So the nub of the real dispute can be circum

scribed thus: on termination of the leases plaintiff, as the.

lessor of the appliances, was entitled in terms of clauses 9 and

10 to their return from the defendant, unless defendant proved

that the verbal agreement between them and Jacobs barred such

recovery. Now for that agreement to operate as such a bar,

defendant had to show that it was an effective or enforceable

agreement. In ny view, for reasons that follow, it failed to

do so.

The .... /15

 15

The verbal agreement itself did not fix "the

nominal amount11 that Jacobs had to pay defendant to entitle

him, defendant, or some other company of his to retain the

appliances. It merely provided that the amount would be

fixed by valuation and agreement by both plaintiff and Jacobs on

termination of the leases. As already pointed out compliance

with that provision was a sine qua non to any effective bar

to plaintiff*s recovery of the appliances. True, it may at

the first blush seem to be highly unnecessarily technical,

if not fatuous, for plaintiff and Jacobs to have to fix 11 the

nominal amount" which Jacobs then had to pay to defendant, his

own company, at a time when plaintiff would seemingly have no

further interest in the matter. But that was the parties’

verbal agreement that defendant relied on; no doubt, too, it

was .... /16

 16

was designed by them in good faith to preserve the essential

nature of their written contracts as true leases for income tax

purposes; it cannot be inferred from Jacobs’s testimony that

° the nominal amount” would be so minimal that the maxim de

minimis non curat lex applied and it could be ignored as a factor;

on the contrary, it appears that it had to bear some relation

to the then actual value of the appliances, especially as the

verbal agreement was to complement clause 10 of the leases;

and consequently due compliance with the verbal agreement

must have been regarded by them as the only way in which

plaintiff could ultimately divest itself effectively of its

rights as the lessor of the appliances. Hence, unless the

plaintiff and Jacobs fixed «the nominal amount” and Jacobs

paid it to defendant, plaintiff remained the lessor of the

appliances .... /17

 17

appliances under the leases and the verbal agreement did not

become effective to bar plaintiff from recovering them in

terms of the leases. It was common cause that this "nominal

amount" was never fixed or paid to defendant. The verbal

agreement was therefore no defence to plaintiff’s claim for

recovery of the appliances. Cf. Biloden Properties (Pty.)

Ltd, v. Wilson 1946 N.P.D. 736 especially at pp. 744-5.

The defendant did not plead that Jacobs was

prepared to enter upon discussions with plaintiff in order to

fix "the nominal amount” and to pay it to defendant, and that.

pending the outcome of those discussions, it was entitled to

retain the appliances. But I dp not think that such a plea

would have availed defendant. For plaintiff could not have

been compelled to enter upon the discussions or to agree upon

any .... /1 8
 18

any amount. And that brings me to consider another approach

to the problem leading to the same result* It can be inferred

from the evidence about the verbal agreement that, on termina.

tion of the leases, Jacobs would be entitled, but not obliged,

to take over the appliances. In other words, the verbal

agreement conferred an option on Jacobs to take over the

appliances for "a nominal amount” to be fixed by valuation and

agreement by both plaintiff and Jacobs; as they might never

agree upon ”the nominal amount”, the price was uncertain and

the option of no force or effect, and it was therefore no

bar to the plaintiff recovering the appliances on termination

of the leases. The reason is that it is essential for the

validity, not only of a contract of sale, but also of an option

to purchase, that the price must be fixed or determinable

by_.... /19
 19

by the parties* agreement» (See Voet 18.1.23» Gane1s Trans­

lation, vol. 3» pp* 277-279; MacKeurtan, The Law of sale

4th ed., p. 57 read with p. 45; for example, Faatz v.

Estate Maiwald 1933 S.W.A. 73 at pp. 90-91; Hattingh v. van

Rensburg 1964 (1) S.A. 578 (T) at pp. 582 C to 583 A;

Globe Electrical Transvaal (Pty.) Ltd, v. Brunhuber and Others

1970 (3) S.A. 99 (e)).

That being so, the defendant’s defence based

on the except io doli also falls away. Counsel for defendant

rightly conceded that, if the verbal agreement between the

parties’ and Jacobs was ineffective or invalid, the exceptio

doli, which was based on it, could not be upheld. The

reason is that the plaintiff, in pursuing its action to re­

cover the appliances in terms of its rights under clause 9

in
 20

in order to deal with them under clause 10 of the parties' written

leases, could then not be held to be acting with any dolus (see

Union Government v. Vian ini Ferro-Concrete Pipes (Pty.) Ltd,

1941 A.D. 43 at p. 50; Paddock Motors (Pty.) Ltd, y, Xngesund

1976 (3) S.A. 16 (A.D.) at p. 28 E - H; and cf. Universal

Stores Ltd, v. O.K. Bazaars (1929) Ltd. 1973 (4) S.A. 747

(A.D.) at p. 762 H).

The appeal must therefore succeed and the

return of the appliances to plaintiff must be ordered. Of course,

when plaintiff receives them, it must deal with them and

their net proceeds in terms of clause 10 of the leases.

In fairness to the learned trial Judge I

should say that the abovementioned point does not appear to

have been raised before him. However, plaintiff was entitled

to .... /21
 21

to raise it on appeal for the first time, for it is purely a

point of law, the factual foundation for which was raised by

the pleadings (i.e., the parties* and Jacobs’s verbal agreement).

and it was fully canvassed in the evidence. Nor should the

successful plaintiff be deprived of the costs of appeal

for having belatedly raised the point on appeal. After all.

the plaintiff might well have succeeded on appeal on the

other points of substance argued on its behalf, and it is by

no means clear that, if it had raised the point in the Court

a quo, that would then and there have finally disposed of

the dispute between the parties, thereby saving the costs

of an appeal (see cole v. Union Government 1910 A.D. 263 at

pp. 281/2; Durban Corporation v. Estate Whittaker 1919 A.D. 195

at p. 203; contra Argus Printing and Publishing Co. Ltd, v.

Die .... /22

 22

Die Perskorporasievan suid-Afrika Bpk. 1975 (4) S.A. 814

(A.D.) at p. 823 E - H, which is clearly distinguishable on

the facts).

The plaintiff^ should, however. be deprived

of some of the costs of appeal on another ground. Certain

parts of the record of the proceedings in the Court a quo were

unnecessarily included in the record for the appeal. Counsel

for defendant submitted that the costs thereanent should be dis­

allowed; counsel for plaintiff could not challenge the correctness

of the submission. The unnecessary parts are

(a) Volume 1 of the record. This comprises the whole of

the opposed proceedings on notice of motion. As the matter was

referred to trial, which was commenced afresh with both parties

filing pleadings, and as viva voce evidence was thereafter fully

adduced .... /23

 23

adduced, the motion proceedings became superfluous for the pur­

poses of the appeal* True, in referring the matter to trial the

Court did order plaintiff’s founding affidavit to stand as

summons and it forms part of volume 1. But as the pleadings for

the trial started with a full declaration by plaintiff, this

affidavit, even though it served as the summons, was also

rendered superfluous.

(b) Pages 136 to 154 of volume 2 contained counsel’s

written arguments that were apparently submitted to the Court a

quo* There is no reason why they should have been included in

the appeal record.

(c) Volume 3 contains exhibits C, and E (pages 266-281),

being copies of the leases and appurtenant documents relating to

the 3 appliances. These documents were also contained in volume 2

. as /24
 24

as annexures A, B, and C to the plaintiff’s declaration. It was

therefore unnecessary to repeat them in volume 3. This Court’s

Rule 5 (12) says "no documents shall be set forth more than once”

in the appeal record.

I am quite sure that defendant would have agreed

to the omission of the abovementioned parts from the appeal record

had it been approached. The costs of appeal relating to them

should therefore be disallowed.

In the result the following orders are made:

1. The appeal succeeds, the orders of the Court a quo are set

aside, and the following orders are substituted -

"(a) Judgment is granted in favour of the plaintiff and

defendant is ordered to deliver to plaintiff -

(i) the Carma Deep Freezer Model 700 VS;

 25

(ii) the Sumak FTS-SB-SM 12 foot Refrigerator;

(iii) the 4 Crolls Air-Conditioning Units Models 220 N

and 330 R.

(b) Defendant is ordered to pay the costs of suit.”

2. The respondent is ordered to pay the costs of appeal, excluding

those in respect of (a) volume 1 of the record, (b) pages 136

to 154 inclusive of volume 2, and (c) pages 266 to 281 in-

volume 3

W,G. TROLLI?; J,A.

MULLERÍ J.A

hofmeyr; J.A
concur

JOUBERT, A.J.A. )