CIV/APN/2/87
IN THE HIGH COURT OF LESOTHO
In the matter of
JOSEPH SEMAKALE LIETA Applicant
v
SETH TATOLO LIETA Respondent
JUDGMENT
Delivered by the Honourable Acting Chief Justice Mr. Justice J.L. Kheola on the 16th day of March, 1987.
On the 6th January, 1987 the applicant brought on ex parte application for an order in the following terms:-
A Rule Nisi issue calling on the respondent on a date to be determined by the above Honourable Court to show cause if any why:
The Deputy Sheriff cannot be authorised to immediately take into his possession and custody a motor vehicle, a toyota stout with engine number 5 R 2243608 and chassis number 621353, 1986 model with registration BD 5563A presently in the possession of respondent and have same parked and stored on the grounds of the above Honourable Court pending the outcome of this application;
The Respondent should be ordered to restore possession of the motor vehicle referred to above to applicant;
Dispensing with the periods provided by the rules of the above Honourable Court for the service of this application on the grounds of urgency,
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Respondent should be ordered to pay the costs of this application;
Granting such further and/or alternative relief as the above Honourable Court may deem fit;
That prayer 1 (a) should operate positively as an interim measure with immediate effect."
The Rule Nisi was issued and made returnable on the 12th January, 1987. On,the return day the rule was extended to the 19th January, 1987. On that day it turned out that the deputy Sheriff had served the papers by leaving a copy at the respondent's house but had not taken into his possession and custody the vehicle which is the subject matter of this application. As the Court had already read the opposing affidavit an order was issued that the deputy sheriff should take no further action to take into his possession and custody the vehicle in question. The Court was of the opinion that the matter would be fina-lised on the 23rd January, 1987. For some reason the matter was not heard on the 23rd and after several extensions of the rule the matter was argued on the 25th and 26th February and on the 2nd March, 1987.
It is common cause that on the 7th July, 1986 the applicant and Financial Services Company of Botswana (Pty) Ltd.(hereinafter referred to as the seller) entered into a hire-purchase agreement. The seller sold to the applicant a Toyota Sout Pick-up for a sum of P21.694-00, including insurance and finance charge at the rate of 12.5% per annum. The applicant paid a deposit of R4000-00 and the monthly, instalment was fixed at P491-50 over a period of thirty-six (36) months. The applicant is up to date with the payments of the monthly instalments.
Clause 1 of the terms and conditions of sale reads as follows:
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"Notwithstanding delivery ownership in the goods shall not pass to the Buyer unless and until the purchase price shall have been paid in full. The risk in the goods shall pass to the Buyer upon delivery."
Clause 2 (a) (ii) reads as follows:
"The Buyer shall keep the goods in his custody at the above address or in address approved by the Seller in writing, properly
garaged, and free of lien and hypothec, and shall not sell, alienate or store them."
In his founding affidavit and in his oral evidence the applicant deposes that he is the owner of immovable property situated at Botleng Lower Seoli, Maseru which is presently occupied by the respondent who is his (applicant's) younger brother. The agreement under which the respondent is occupying the immovable property was based on brotherhood. The applicant avers that he is currently running businesses in Gaborone, Botswana where he spends most of his time and this is the reason why he had to leave his immovable property in the custody of the respondent.
The applicant avers that in July, 1986 the respondent paid him a visit in Botswana; while he was in Botswana the respondent borrowed the applicant's Toyota Stout Pick-up with registration No. BD 5563A which is the same vehicle he had bought on hire-purchase agreement from Financial Services Company. The reason for borrowing the vehicle was to enable the respondent to run his business which he had just started. On the 13th December, 1986 the applicant came to Maseru and told the respondent that he had come to fetch his vehicle. The respondent said that the vehicle belongs to him (respondent).
He admits that in June, 1986 the respondent took a sum of R6000-00 to Botswana. He alleges that the money was rentals for his immovable
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property referred to above. On the other hand the respondent alleges that the money was intended to be used as a deposit for the vehicle which Is the subject matter of this dispute. The appli-cant deposes that the rentals were for the period from 1977 when the respondent started living there to June, 1986. The exact amount of rentals in areas was R5200-00, however the respondent decided to pay R800-00in advance.' In August, 1986 the respondent expressed his wish to buy the immovable property referred to above. The applicant agreed to this offer and the price was fixed at R13,000-00 which was to be payable,at the rate of R1,000-00 per month. Exhibit G is the written agreement for the sale of applicant's site at Lower Seoli.
Pursuant to the agreement the respondent paid,P1000 and another P500 to cover the months of August,' September and October,. From-November to date the respondent has not paid the instalments. He denies that the money was for the payment of monthly instalments in respect of the vehicle.
The version of the respondent is that all the monies sent to Botswana were for the purchase of the vehicle . He deposes that in June, 1986 he went to Botswana carrying an amount of R6,000-00 because his elder brother, Moruti Lieta who had some dealings with Financial Services Company of Botswana had promised to buy a vehicle for him using his (Moruti's) name. Unfortunately when he arrived in Botswana he met the applicant who also had some dealings with Financial Services Company. At that time Moruti Lieta was at Mahalape attending a retreat. The applicant and the respondent agreed that the money should be deposited in the account of the applicant and that he (applicant) should buy the vehicle for the respondent. When the application,form to the seller was filled Moruti had returned from Mahalape but the three brothers decided that as the money was already in the account of the applicant he should
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enter into the hire-purchase agreement.
The application was accepted by the seller and on the 7th July, 1986 the applicant signed the hire-purchase agreement form and the vehicle was duly delivered to applicant. It is the respondent's evidence that although every document is in the name of the applicant the vehicle was bought by him. He called a number of witnesses including Moruti Lieta, his father and the chief's representative. All the witnesses testified that all the monies were intended for the purchase of the vehicle. Exhibit G was required by the Bank to show why such large amount of money was to be taken put of the country.
I have thoroughly considered the evidence and have come to the conclusion that the balance of probabilities is in favour,of the respondent that the money was, intended for the purchase of the vehicle in the name of the applicant because of his credit worthiness with the seller. It is most improbable that the applicant could buy, for himself a new motor vehicle on the 7th July, 1986 and part with it on the 23rd July, 1986 immediately after it was registered in Botswana. On the 23rd July, 1986 he allowed the respondent to take the vehicle out of Botswana In contravention of the provisions of the law of Botswana as well as in breach of the terms and conditions of the hire-purchase agreement under which the vehicle was to remain in Botswana at an address agreed upon until it was fully paid for. It could be taken out of Botswana only with the written permission of the seller. The applicant and the respondent were aware that . they were breaking the law when they took the vehicle out,of Botswana
permanently without a written permission of the seller;
The applicant is now liable to a criminal charge when he goes to Botswana and his creditworthiness with the seller and any financial
institutions in Botswana which are aware of his fraudulent dealings, is questionable.
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It is very clear from the papers that the applicant duly put the money he got from the respondent to the use to which the parties had intended, i.e. payment of the monthly instalments for the purchase of the vehicle. The trouble started on the 19th November, 1986 when the respondent assisted by Moruti Lieta fraudulently let out the secret. They wrote a letter to the seller pretending to be the applicant informing the seller that a stop-order had been signed with Barclays Bank of Lesotho to pay P500 to the seller's bankers on the 25th of every month. They also asked for a statement of the account. As a result of this fraudulent act by the respondent and his clergy brother the seller eventually became aware that the vehicle was in the hands of a wrong person and that it had been permanently taken out of Botswana. The applicant came to Lesotho and was forced to institute these proceedings.
There is no doubt in my mind that the contract between the applicant and the respondent was illegal in that they agreed that the vehicle which is still under hire-purchase agreement be permanently taken out of Botswana without a written permission of the seller. This unlawful removal is potentially prejudicial to the seller because it is now without security for the loan given to the applicant. The seller can lo longer repossess the vehicle if the applicant committed any breach of the contract.
The general rule against the rescission of an illegal contract is expressed in the maxim, in pari delicto potior est condition possidentis, which means that where both parties are equally in the wrong, he who is in possession will prevail. In other words, where money has been paid or property delivered pursuant to an illegal contract the loss lies where it falls, and the machinery of the courts cannot be invoked to restore a party to the position which would have existed had there been no performance (Levy v. Katz, 1914 W.L.D.88, Thornycroft v. Vas, 1957 (3) S.A. 754 (F.C), Thompson v Van der Linden, 1942 N.P.D. 295). In all these cases
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the illegal contract affected only the two parties who were involved in it and no third party suffered any damages as a result of it. In the instant case the seller of the vehicle is being prejudiced.
The relexation of the pari delictun rule has been done in a number of cases. In the case of Fajbhay v. Cassim, 1939 A.D. 1939 the Appellant Division expressed the view that the public policy upon which the rule is founded does not require that in all cases there should be ah inflexible denial of relief, and that in suitable cases the courts may come to the relief of a party to an illegal agreement, where it appears necessary to do so in order to prevent injustice on the basis that public policy should properly take into account the doing of simple justice between man and man. In the present case the respondent has so far paid P5966.00 leaving a balance of P15,728-00. The applicant who is the only party to the hire-purchase agreement is not only faced with a criminal charge when he returns to Botswana but will also be expected to pay the balance because he is in breach of the contract by removing the vehicle out of Botswana permanently without the written consent of the seller. In the meantime the respondent is enjoying the use of the vehicle and is under no threat of criminal prosecution or a civil judgment.
In Petersen v. Fajbhay, 1940 T.P.D 182 the parties had entered into an illegal lease. The defendant had failed or refused to pay rent and the plaintiff had cancelled in terms of a clause in the agreement which gave him the right to do so in that event. It was held that justice between the parties demanded the relaxation of the rule in the plaintiff's favour. I may add that if the Court had refused to grant the relief sought, the defendant would have been unjustly enriched at the expense of the plaintiff because he would have remained in occupation while paying no rent. See Padayachey v. Lebese, 1942 T.P.D, 11 and Wylock v. Milford
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Investments (Pty) Ltd., 1962 (4) S.A. 298 (c).
In the instant case the position is that the applicant is going to face a criminal charge and a civil judgment in an amount of money much greater than the amount paid by the respondent to date. Moreover the possession and use of the,vehicle will still be enjoyed by the respondent who is not within the jurisdiction of Botswana Courts of Law. The only reasonable and practical remedy open to the seller is to claim compensation from the applicant who has illegally transferred possession of the vehicle to a third party with whom the seller has no contract. It was suggested that the seller as owner was entitled to bring a vindicatory action against the respondent. I agree that it is possible to do so, but the inconvenience and costs that a Botswana national has to face when he sues a national of Lesotho are prohibitive. It will be easy and convenient to sue the applicant who is a Botswana citizen.
Referring to the case of Fajbhay v. Cassim (supra) at p. 539 Mr. Maqutu, for the respondent, quoted the words of Centlivres, J.A. when he said;
"What the Court could not do was.............. enforce the contract. But to refrain from taking any notice of it; so as to let the defenders retain potatoes without paying for them, would amount to gross injustice."
Mr. Maqutu submitted that in the present case to allow applicant to have the vehicle he has not paid for simply because the parties, contrary to an agreement with the seller, bought it in the name of the applicant would amount to gross injustice. I would agree with that submission if the respondent had,already paid between 80% and 90% of the purchase price of the vehicle. At the moment he has
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paid just over 25% of the purchase price and there is no way of enforcing further payments because he is not party to the contract. It seems to me that after this litigation the respondent will not be prepared to remit any more monies to the applicant and the seller is apparently not prepared to have anything to do with the respondent. The seller will demand full payment from the applicant.
If the vehicle were returned to the applicant the respondent shall be entitled to claim repayment of only P5966.00 from the applicant
because the money he paid by stop order has not been . credited to the purchase of the vehicle and is still readily available to him. And yet if the vehicle were to remain in the possession of the respondent the applicant would immediately face a criminal charge. In addition to that he would have to pay forthwith the full unpaid balance of all monies payable under the agreement. This would amount to gross injustice as far as the applicant is concerned and his estate may even have to be sequestrated.
I am of the opinion that the applicant has proved on a balance of probabilities that special circumstances exist which entitle this
Court to relax the harsh effects of the pari delictum rule in his favour.
The rule is confirmed with costs.
J.A. KHEOLA
ACTING CHIEF JUSTICE.
16th March, 1987.
For Applicant - Mr. Mphalane
For Respondent - Mr. Maqutu.
