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Homefront Trading 2 BK and Another v Palm (13538/07)  ZAGPHC 32 (18 April 2007)
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IN THE HIGH COURT OF SOUTH AFRICA
(TRANSVAAL PROVINCIAL DIVISION)
CASE NO: 13538/07
18 APRIL 2007
In the matter between:
HOMEFRONT TRADING 2 BK First Applicant
ELIZABETH WILHELMINA HOLLIER Second Applicant
RUFAN BAREND PALM Respondent
1. The applicants allege that they have been unlawfully deprived of possession of certain jewellery and documentation by the respondent and hence seek a mandament van spolie restoring possession.
2. The first applicant, Homefront Trading 2 CC, (“Homefront”) trades as a jewellery shop under the name of Rich Man Poor Man Jewellers at Shop 63, Jacaranda Centre, Rietfontein, Pretoria. The second applicant is the sole member of Homefront and also the manageress of the business.
3. The respondent is a businessman who has had a business association with the second applicant, which involved an interest in the jewellery shop, the exact nature of which will become apparent in due course.
4. In a relatively brief founding affidavit, the second applicant sets out her version of the events of the dispossession, some of which are common cause.
5. On Saturday 31 March 2007 the respondent, accompanied by two police officers of the Moot police station, went to the premises of the jewellery shop and with their assistance packed the entire stock at the shop into evidence bags, sealed them and took them home. At a later stage, the items were returned to the police station consequent upon a charge of theft being laid against the respondent. They were recorded in the SAP 13 register and retained as evidence in terms of section 20(a) of the Criminal Procedure Act 51 of 1977, where they presently remain in police custody.
6. At the same time the respondent removed four lever arch files of documents, some of which have been returned, but in respect of the balance, the applicants persist in their prayer for appropriate relief.
7. On 2 April 2007 the applicants filed a notice of motion giving notice of their intention to seek a mandament van spolie on an urgent basis on 5 April 2007. The matter came before Preller J on that day, who postponed it for legitimate reasons to 12 April 2007. In the interim the respondent has filed a counter application, the details and impact of which I will consider later. The matter came before me yesterday, 16 April 2007 when I made a ruling that it was urgent and after hearing full argument reserved judgement on the merits.
8. On the question of urgency, I was persuaded by the applicants that given the allegations of unlawful deprivation, the claim that the respondent had resorted to illegitimate self-help and that the applicants may have been unlawfully deprived of approximately 50% of the stock of the shop, with a retail value of R400 000, disabling them from conducting their business and posing the danger of a loss of valuable items, while out of their custody, that a robust and speedy response may be called for, and hence that the matter should be regarded as urgent. Normally, in order for the expeditious restoration of possession to serve as an effective remedy against illicit self-help, a court should be inclined in the interests of the proper administration of justice to hear an application for a mandament van spolie as a matter of urgency. This case is no different.
7. Turning therefore to the merits. The applicants aver that they were in peaceful and undisturbed possession of the items and that the respondent’s conduct on 31 March 2007 amounted to an unlawful spoliation because the dispossession was without the consent of the applicants, without recourse to the legal process and involved the respondent taking the law into his own hands in relation to a dispute regarding the jewellery business which may ultimately require resolution in criminal proceedings or in the liquidation of a second company, SA Global Precious Metal Design and Casting CC t/a Richman Poorman Jacaranda, (“SA Global”), in respect of which both the second applicant and the respondent had either an interest or association.
10. The respondent filed an opposing affidavit on 4 April 2007, and the counter application on 11 April 2007, a few days after Preller J had postponed the spoliation application on 5 April 2007.
11. The answering affidavit filed in the spoliation application is somewhat contradictory in the stance taken to whether or not the applicants were in undisturbed possession of the jewellery and documentation. I shall deal with this aspect presently. However, in general terms, it is clear that the respondent considered himself justified in dispossessing the applicants of the goods because he regarded the applicants to be in unlawful possession of the goods in respect of which he contends he has a ius possidendi. It is trite that a ius possidendi cannot of itself serve as sufficient justification for the spoliation of an unlawful possessor.
12. In order for the applicants to succeed they must prove that they were in possession and that an act of spoliation was committed. Such must be established on a balance of probabilities, a prima facie case being insufficient.
13. It is common cause that on 31 March 2007 the jewellery and documentation were at Shop 63, Jacaranda Centre. The question is: were they in the undisturbed possession of the applicants? They say they were. The respondent counters that they were in the undisturbed possession of SA Global, but confusingly at different points in the answering affidavit seems to concede that the items were indeed in the possession of the applicants. It is therefore necessary to analyse the answering affidavit carefully.
14. Before dealing with the averments of the applicants, the respondent sets out the background to his involvement with the business of the jewellery shop. In October 2004 he invested R500 000 in SA Global and acquired a one-third member’s interest in the close corporation. The other two-thirds were held by a Mr Wolmarans and Mr JJ van Zyl. The second applicant is the step-daughter of Van Zyl and was at that stage employed as an administrative assistant in Richman Poorman Jewellers. It later became evident that Van Zyl held his one-third on behalf of his stepson JC Jacobs. Later in 2004 this share was transferred from Jacobs to the second applicant. Wolmarans acted as shop manager, van Zyl as “bedryfsbestuurder” and the respondent as a silent partner. Each received a monthly salary of R8000-.
15. In 2005 problems arose between Wolmarans and van Zyl resulting in his member’s interest ultimately being acquired in equal shares by the second applicant and the respondent.
16. During 2005 a further re-structuring of SA Global took place, the result of which was that the respondent and van Zyl both ended up with a 50% share.
17. The respondent played a key role in overseeing the finances of SA Global and had responsibility for signing cheques at the instance and request of the second applicant. After Wolmarans left he experienced difficulty in obtaining financial information and responded by refusing to sign cheques unless and until he was provided with monthly reports. Things deteriorated to such a degree that eventually on 1 February 2006 the attorneys for SA Global addressed a letter to the respondent’s attorneys threatening an application for a mandamus compelling the respondent to sign cheques. Although the parties settled this dispute, the difficulties around the financial information continued.
18. The respondent then gained access to the bank account of SA Global via the internet where he discovered that since August 2005 cash receipts had not been banked. On 19 April 2006 the respondent also established via the internet that credit card transactions concluded at the shop were not being credited to the account of SA Global.
19. Further enquiry and investigation led the respondent to infer that van Zyl was channeling the funds of the business through a different bank account.
20. When the respondent failed to make any headway in attempting to clarify the position with van Zyl, he laid a charge of fraud against van Zyl in July 2006. This seems to be pending still.
21. In March 2007 the lease in respect of Shop 63, which had been signed by Wolmarans on behalf of SA Global, expired. Wolmarans and the respondent visited the lessor, because Wolmarans wished to limit his liability for any rentals. They were informed that the second applicant had been requested to vacate the property. Acting on this information the respondent believed he was entitled as a 50% member of the corporation to go remove the stock and the financial documentation.
22. In reply, the second applicant, on behalf of both applicants, took the view that it was unnecessary to respond to the various background averments in the answering affidavit, because, so she contended, they disclosed no defence to the relief sought, especially in view of the respondent having admitted, at least in her opinion, to having spoliated the applicants of their peaceful and undisturbed possession, while justifying his conduct in that regard. However, in her answering affidavit to the counter application, the second applicant thought better of her strategic silence, and despite her view that the counter application was inadmissible, (for reasons upon which I will elaborate later), she tendered some explanation for the turn of events whereby the jewellery business came to be traded through or out of Homefront (the first applicant).
23. The second applicant confirms the general tenor of the events spelt out by the respondent, and in particular the souring of the relationship. However, she avers that an agreement was reached to open a second shop in Elardus Park, that another close corporation would take over that business and ultimately that the respondent would give up his 50% interest in SA Global in exchange for a controlling interest in that company, namely Richman Poorman Jewellers South CC. The record reveals that the respondent did indeed hold a 60% interest in this company. Nevertheless, the respondent did not resign from SA Global and his signature on the cheques was still required. After taking legal advice the second applicant registered Homefront, which then took over “die voorraad sowel as al die regte en verpligtinge” of SA Global. One must ask in passing how it was able to do so without the co-operation of the respondent. Be that as it may, the second applicant then began trading the stock and using a different bank account in the name of Homefront.
24. There may be some question about the propriety of the second applicant’s conduct. It should however be kept in mind that the Elardus Park business was opened with the provision of R262 000 stock by SA Global, which also paid the first month’s rent and the deposit. No replying affidavit contradicting these facts was filed in the counter application.
25. Whatever the legalities, the rights or wrongs, the rights and duties, or the merits of the dispute, the primary and critical question for determination in the present application is whether Homefront was in actual possession of the stock and documentation at the time that the respondent removed them on 31 March 2007. Possession, as is well known, being comprised by physical control and the mental element of animus possidendi, both elements being questions of fact.
26. In response to the applicants’ averment that they were in peaceful and undisturbed possession, the respondent in paragraph 23.1 of the answering affidavit denies that the second applicant was in possession on behalf of Homefront. In his view the second applicant was merely an employee in SA Global of which he held a 50% share. In support of the submission that SA Global was in fact in possession, the respondent relied on the fact that until 31 March 2007 SA Global was the lessee of Shop 63, that the telephone account remained in the name of SA Global and most importantly evidence that until very recently the second applicant was still conducting the business under the name of SA Global. Thus, in paragraph 27.4 of the answering affidavit the respondent states:
“Sedert 31 Maart 2007 word ek konstant geskakel deur kliënte wie juweliersware ingegee het by Precious Metal BK, en nie die juweliersware kan terugkry uit die 2de Applikant nie. Die bedrog wat die 2de Applikant pleeg blyk ook duidelik uit die feit dat alhoewel die opbrengste van verkope in haar rak beslote korporasie se rekening gebank word, sake steeds gedoen word tot op hede in die naam van Precious Metal BK. In die verband verwys ek die Agbare Hof daarop dat op 14 Maart 2007 het mev Smit ringe gaan ingee om herstel te word. ‘n Faktuur is aan haar uitgereik deur “SA Global Precious Metal Design & Casting cc h/a Richman Poorman Jeweller”. Ek verwys die Agbare Hof met respek na ‘n afskrif van hierdie faktuur hierby aangeheg en gemerk aanhangsel “RBP8”. Dit is verstommend dat die 2de Applikant ten spyte hiervan, poog om hierdie aansoek te bring en die Agbare Hof onder die wanindruk te bring dat die 1ste Applikant vanaf hierdie perseel handel dryf en die voorraad aan die 1ste Applikant behoort of in die vrye en ongestoorde besit van die 1ste Applikant was.”
This is a very strong denial that Homefront was in possession. The invoice mentioned in the above passage bears the stamp of SA Global t/a Richman Poorman Jewellery. The replying affidavit of the applicants fails to deal with paragraph 27.4 at all.
27. Mr van den Heever, who appeared for the applicants, urged me to regard these factors as irrelevant, being, as he contended, only relevant to the rights of the parties and the merits of the dispute and thus have no bearing on the question of spoliation. I think not. The lease, the telephone account and the invoice are relevant to the determination of actual possession, providing as they do circumstantial evidence of the factual compound of physical control and the mental attitude making up the situation of possession. The issuing of an invoice in the name of SA Global, without any rebuttal or explanation for doing so, gives rise to the legitimate inference of an animus to trade as SA Global and thus that the stock was controlled and held by the second applicant acting on behalf of SA Global and not Homefront. The inference is further bolstered by the continuation of the lease and the telephone account in the name of SA Global, neither of which has been denied or explained in reply.
28. The applicants have referred me to various paragraphs in the answering affidavits in support of their contention that the respondent has conceded that the applicants were in peaceful and undisturbed possession and that he spoliated them. In particular, reliance was placed upon paragraph 23.5 which states:
“Dit blyk nou dat die 2de Applikant by wyse van bedrog en wel nadat sy ‘n rak beslote korporasie bekom het en haarself as lid tot die beslote korporasie geregistreer het, vanaf 19 April 2006 onregmatig en by wyse van bedrog:
a) ’n bankrekening vir die rak beslote korporasie geopen;
b) alle kontant ontvang namens Precious Metal h/a Richman Poorman Jewellers in hierdie korporasie se nuwe rekening gedeponeer;
c) alle kredietkaart transaksies laat krediteer teen hierdie rekening in plaas van die rekening van Precious Metal;
d) in die algemeen vanaf ongeveer April 2006 op ‘n bedrieglike wyse die besigheid Global Precious Metal Design & Casting BK h/a Richman Poorman Jeweller gekaap het deur ‘n rak beslote korporasie aan te skaf, en voortaan met die handelsvoorraad en op die perseel van Precious Metal handel te dryf asof Precious Metal opgehou het om te bestaan.”
The submission was made, with reference to sub-paragraph d), that such amounts to a concession that the stock was in possession of Homefront.
29. Likewise, Mr van den Heever referred me to paragraph 20.5 which reads:
“Ek het tot en met hierdie aansoek beteken is onder die wanindruk verkeer dat Van Zyl op ‘n onregmatige wyse vir die korporasie ‘n nuwe bankrekening by FNB gaan oopmaak het, maar het nou besef dat hulle slimmer as dit was. Hulle het dood eenvoudig ‘n rakmaatskappy aangekoop, die 2de Applikant as enigste lid geregistreer, hiermee ‘n nuwe bankrekening by FNB oopgemaak, Precious Metal se voorraad verkoop en die opbrengs in die nuwe bankrekening gestort.”
The suggestion here being that the turnover of stock in the ordinary course reflected that Homefront would have come into possession of newly purchased stock and that such is acknowledged and admitted in effect by the respondent in this paragraph.
30. While I accept there is a measure of apparent contradiction in these statements, I agree with Mr Greyvenstein that they should be read together with the denials in paragraphs 23.1 and 27.4, meaning from the respondent’s perspective that the channeling of funds through the Homefront bank account did not necessarily mean that SA Global was not in actual possession of the stock. The critical factor, as I have intimated, is the mental attitude of the second applicant who at various times acted on behalf of both companies. And the long and short of it is that there is a material dispute of fact, as to what her mental attitude was at the relevant time, that cannot be resolved on the papers. Nor would it be legitimate to rely on her averments in the counter application to attempt to resolve the dispute of fact that has arisen in the spoliation application.
31. As stated at the outset, the onus is on the applicants to prove on a balance of probabilities that they were in possession. Because the mandament brings final relief, a prima facie case will not be enough. The facts averred by the applicants that have been admitted by the respondent together with the facts alleged by the respondent do not justify an order of mandament van spolie in the present circumstances.
32. Where at the hearing of application proceedings a dispute of fact arises on the affidavits and cannot be resolved without hearing oral evidence the court has a discretion to hear oral evidence, order the parties to go to trial or simply to dismiss the application. Normally in a possessory application of this kind a dispute of fact regarding the mental attitude of the allegedly dispossessed party might best be resolved by a referral of that issue to oral evidence. However, I have little sympathy for the applicants. When the second applicant came into dispute with the respondent she transferred the trading turnover of SA Global to the bank account of Homefront without the authorisation of the members SA Global. Accepting that she was in a difficult situation, the appropriate course of conduct would have been for her as a creditor or member to seek the urgent liquidation of SA Global. When she launched the spoliation application she should have realised that a serious dispute of fact about whether Homefront or SA Global was in possession was bound to develop. In the premises, the spoliation application should be dismissed.
33. As alluded to more than once, the respondent filed a counter application on 11 April 2007 for an order that the Station Commander, Moot Police Station be ordered to hand the stock to the Sheriff, Pretoria West pending an application for liquidation of SA Global. In the ordinary course of spoliation applications a counter application will not be countenanced because possession must be restored ante omnia before the evaluation of the respective rights of the parties. Hence, even a thief who came into possession unlawfully is entitled to be put back into possession, if spoliated by the lawful owner, pending the determination of ownership. However, in the present case the applicants have failed to prove that they were in possession and thus that they were spoliated. Accordingly, there is no bar to granting the relief sought in the counter application on that ground.
34. As I have indicated, the dispute between the second applicant, the respondent and SA Global would have best been resolved by agreement, failing which liquidation proceedings. The relief sought in the counter application seeks to achieve that result, albeit belatedly. The stock should be held by the Sheriff pending the appointment of a liquidator. Given that the police no longer propose to pursue a criminal case, they are obliged in terms of the Criminal Procedure Act to restore the goods to the respondent from whom they obtained them. The respondent is thus the appropriate person to transfer them to the Sheriff, who will hold them pending the appointment of a liquidator and who will be in a position to resolve any adverse claims by the liquidator and the applicants by means of the interpleader procedure provided for in rule 58.
35. In the premises the following orders are issued:
a) The application for a mandament van spolie is dismissed.
b) The respondent is directed to file an urgent application for the liquidation of SA Global Precious Metal Design and Casting CC within 10 days of this order.
c) The respondent is directed to take possession of the jewellery presently in possession of the Station Commander, Moot Police Station under MAS 342/03/2007 in the evidence register SAP 13- 289/2007 and to hand it to the Sheriff, Pretoria West within 2 days of this order.
d) The Sheriff is directed to retain possession of the goods pending the appointment of a liquidator and thereafter shall deliver the same to the liquidator or if need be and if appropriate may deal with them in accordance with rule 58.
e) The applicants are ordered to pay the costs of the application and the counter application.
JUDGE OF THE HIGH COURT
TRANSVAAL PROVINCIAL DIVISION
Counsel for the Applicant, Adv BC van den Heever SC, Pretoria and for the Respondent, Mr C Greyvenstein, Pretoria.
Attorney for the Applicant, Marius Coertze Attorneys, Pretoria and for the Respondent, Greyvenstein & Gründlingh Inc., Pretoria.