CIV/APN/225/85

IN THE
HIGH COURT OF LESOTHO

In the
Application of :

BARCLAYS
BANK PLC Applicant

v

TABIRITH
CONSULTANCY (PTY)LTD Respondent

JUDGMENT

Delivered
by the Hon. Acting Mr. Justice D. Levy on the 27th day of
November,1985.

Applicant
seeks the attachment of certain computer hardware presently in the
possession of the Respondent in order to protect that
property
against deterioration in value pending the determination of
CIV/T/G46/85 which is an action brought by Applicant for the
recovery
of the property in question.

The
Applicant alleges that it is the owner of the property which was
leased to the Respondent and that in breach of the terms of
the lease
Respondent allowed a judgment against it (in favour of a 3rd party)
to remain unsatisfied for more than 7 days entitling
Applicant to
cancel the lease and recover the property. Applicant alleges that the
property will deteriorate in value if it is
left in the hands of the
Respondent and that it will be seriously prejudiced thereby by the
consequent redu­ction in value
of its security for the balance of
the amount owing which with finance charges amounts to R32,367.5t.

A curious
feature of this lease is that while the lease provisions define the
lessor's rights as though it were the true owner of
the goods such as
by allowing the lessor on cancellation of the lease to recover the
goods as its own property and to claim as
liquidated

2

damages
the balance of rental due under the lease, it appears that in fact
the Respondent had contributed an amount of R25.000 towards
the cost
of the goods.

The goods
were apparently supplied by Quadrant Computers on an invoice
addressed to applicant as ostensible purchaser for delivery
to
Respondent. This invoice shows that an amount of R25.000 had been
paid to the suppliers of the goods by Respondent while the
balance of
the invoiced costs of the goods amounting to R25647 was debited to
Applicant.

This
allegation is not denied by Applicant. Its Assistant Manager, Mr.
Kimane, said that Applicant agreed to finance the balance
of the
purchase price of the goods. He is wrong, however, in saying that the
cash purchase price of the goods was the sum of R25,647.
That amount
was the sum remaining of the purchase price after Respondent had paid
R25,000 to the supplier of the goods.

The
goods, of course, were delivered directly to the Respondent, but it
is provided by the lease agreement that the goods are and
shall
remain the property of the lessor and that nothing in this agreement
shall be construed as conferring on the lessee any right
or interest
in the goods other than as lessee.

Obviously,
Applicant was not prepared to risk financing the whole of the
purchase price of the goods but required a substantial
contribution
by Respondent toward the cost of the goods. If the lease agreement is
inforceable in its entirety then, in the result,
following on default
by Respondent and repossession of the goods by Applicant, Applicant
will be enriched by the amount of Respondent's
contribution to the
cost of the goods, less

3

depreciation.
Can this be the true intent of the parties or is there some
unexpressed agreement or tacit understanding between the
parties to
justify a finding that the transac­tion of lease is a simulated
one?

See
Skjelbreds Rederi and Others v. Hartless 1982(2) S.A. 710 at 713.

The
payment by the Respondent of a part of the purchase price of the
goods is an unusual stipulation in a lease of goods but the
Court
must be satisfied before finding that this is a simulated
transaction, that there is an ascentainable real intention differing

from the simulated intention,,

See S. v
Coin Operated Systems (Pty) Ltd. 1980(1)S.A. 448 @ 453. What then can
have been the real intention of the parties? This
could be :

1. That
   the Applicant lend the Respondent the

   
   

balance of the purchase price and that the goods be deemed to be the
property of the Applicant as a form of disguised pledge; or

2. That
   the parties are the joint owners of the

   
   

goods and that the applicant sell its share to Respondent on terms,
with the goods (in­cluding Respondent's undivided share)
as
security for the Applicant's claim, again in the form of a disguised
pledge.

3. That
   Respondent partly finance the costs of the goods and risk the
   forfeiture of that cost to itself in the event of a breach
   by it of
   the agreement. This leaves the lease unaltered in its nature and
   merely enlarges the financial exposure of the Respondent
   to loss in
   the event of breach; in other words, a form of forfeiture by
   Respondent is envisaged by the parties of the amount
   of R25,000
   contributed by Respondent to the cost of the goods.

   
   

Of
course, all financial leases of this nature tend to indicate that the
real transaction is one of loan

with a
disguised pledge which may be ineffective, since the goods remain in
the possession of the pledgor.

But one
cannot ignore the fact that the papers show that as between the
supplier of the goods and the Applicant, the

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Applicant
was the purchaser of the goods. As between the Applicant and the
Respondent the lease agreement makes it clear that the
Applicant is
the owner of the goods. But can it have been the further intention of
the parties that on breach by the Respondent
it shall forfeit the
R25,000 contributed by it to the purchase price of the goods.

It seems
to me that the probable nature of this transaction is that Applicant
bought only a proportionate share of the goods by
its acceptance of
the invoice from the suppliers which it then leased to Respondent. By
paying R25,000 towards the costs of the
goods, Respondent for its
part acquired ownership of the remaining portion of the goods.

In such
case the parties are joint owners of the goods in undivided shares
and in seeking an interdict as it does Applicant seeks
to deprive
Respondent of the use of its undivided share of the goods. These are
all largely conjectural hypotheses and it seems
to me that the trial
Court after hearing evidence will be better able to deter­mine
the true nature of the transaction between
the parties. In the
meantime Applicant asks that the goods be removed entirely from
Respondent pending the dermination of the action
between them.

In these
circumstances, I am unable to agree that Applicant will suffer any
prejudice if Respondent continues to use the goods and
continues to
pay the instalments due to the applicant under the lease agreement,
Respondent uses the goods, so it alleges, in its
administration of a
major contract with the Highland Water Scheme and the poten­tial
prejudice to Respondent would appear too
far outweigh that of the
Applicant.

I must
therefore, refuse Applicant the relief it seeks but I leave the
question of costs for the determination of the trial Court.

The
application is dismissed and costs are reserved for determination by
the Court hearing Civil Trial 646/35

D. LEVY

ACTING
JUDGE

For
Applicant : Mr. Addy 27th November, 1985.

For
Respondent: Mr. Harley