THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT

Not Reportable
Case No: 260/2017

In the matter between:

STU DAVIDSON AND SONS (PTY) LTD                                                APPELLANT

and

EASTERN CAPE MOTORS (PTY) LTD                                              RESPONDENT

Neutral citation:  Stu Davidson v Eastern Cape Motors (260/2017) [2018]
ZASCA 26 (23 March 2018)

Coram:
Lewis, Ponnan and Seriti JJA and Pillay and Schippers AJJA
Heard:
22 February 2018
Delivered:
23 March 2018

Summary:  Damages for breach of warranty – ‘substantial/major’ accident affecting
resale of motor vehicle. Terms of warranty clear.
Special leave – test for – requires something more than reasonable prospects of
success on appeal. Ultimately court hearing appeal decides whether special
circumstances exist. No special circumstances found – appeal struck from the roll
with costs.

___________________________________________________________________

ORDER

On appeal from: Eastern Cape Division of the High Court, Port Elizabeth
(Rugunanan AJ and Pickering J sitting as court of appeal):
The appeal is struck from the roll with costs.

JUDGMENT

Lewis JA (Ponnan and Seriti JJA and Schippers AJA concurring)

[1] The litigation between the parties in this matter started in the Regional Court,
Port Elizabeth. The appellant, Eastern Cape Motors (Pty) Ltd (Motors), sued the
respondent, Stu Davidson and Sons (Pty) Ltd (Davidson), for damages for breach of
a warranty made in a contract for the sale of a Volkswagen Transporter motor
vehicle (the vehicle) by Davidson as a trade-in, when the latter purchased a Ford
Ranger vehicle from Motors. The price for the vehicle paid by Motors was some
R245 000. Motors also claimed costs incurred in attempting in its turn to sell the
vehicle. Davidson counterclaimed for rectification of the trade-in declaration.

[2] The regional court dismissed the claims and did not deal with the
counterclaim for rectification. On appeal to the full bench of the Eastern Cape
Division of the High Court, Grahamstown, the appeal court (Rugunanan AJ,
Pickering J concurring) found that Davidson had breached a clear warranty in the
trade-in declaration attached to the agreement of sale. It ordered that Davidson pay
R95 000 to Motors as damages for breach of the warranty but dismissed the claim
for the costs associated with trying to sell the vehicle subsequent to the trade-in. The
issue of rectification was not traversed save in so far as Davidson contended for a

very wide interpretation of the trade-in declaration which was not supported by the
evidence and rejected by the appeal court.

[3] Davidson  appeals against the decision of the full bench with the special leave
of this court. This court will not interfere with a decision of the full court only because
it considers it to be wrong. What is required, in addition, is some additional factor or
criterion (Westinghouse Brake & Equipment (Pty) Ltd v Bilger Engineering (Pty) Ltd
1986 (2) SA 555 (A) at 561E-F). The fact that leave to appeal has been granted
upon application to the President of this court is not decisive of that enquiry.
It remains for the court upon a consideration of the appeal to make that
determination.  I shall deal first, however, with the background to the contract of sale,
its terms, and then with whether the warranty was breached.

[4] Davidson regularly bought vehicles from Motors. In November 2012,
Mr Patrick Davidson (Patrick) bought a new vehicle from Motors, a Ford Ranger, and
offered the vehicle in question as a trade-in to Motor’s representative,
Mr C Pommerel. Pommerel agreed to pay R245 000, and prepared a written
agreement of sale. This comprised an ‘offer to purchase’ in respect of the new
vehicle bought by Davidson, ‘special conditions of offer to purchase’ and a ‘trade-in
declaration’.

[5] The special conditions related to both parties’ rights and obligations in respect
of the trade-in. Clause 7 stated, inter alia, that the vehicle was sold ‘voetstoots’.
Clause 12, which is presumed to refer to Davidson, stated that the  vehicle was
warranted to be the sole property of Davidson, that the date of first registration was
correctly reflected, that the odometer reading was correct, and that ‘the trade-in
vehicle offered in this agreement has not been involved in any accident’.

[6] It is not clear why this provision was not amended, because Patrick had in fact
advised Pommerel that the vehicle had been involved in a collision, and Pommerel
had seen pictures of the vehicle which showed at least cosmetic damage to it.

[7] The trade-in declaration, on the other hand, contained the following clause,
which is at the heart of the dispute. It read ‘I /we warrant and declare that: The
vehicle has not been involved in a substantial/major accident (particularly if it will
affect resale value).’ It was dated 3 December 2012.

[8] Motors claimed damages for breach of this warranty on the basis that had it
known that the vehicle had been involved in a major accident it would not have
purchased it, or would have paid only R150 000. The damages claimed, and
awarded by the full bench, amounted to the difference between what Motors had
paid for the vehicle, and what it eventually sold it for – R95 000.

[9] It transpired after the sale was concluded and Motors tried to sell it that it had
indeed been involved in a major accident, such that the manufacturer, Volkswagen,
had written off the vehicle and that the Volkswagen warranty on it had been
cancelled despite the vehicle being sold new only a year previously. Motors claimed
in the alternative for damages in delict, but it is not necessary, in view of the
conclusion to which I come, to deal with the delictual claim.

[10] The evidence before the regional court established that Prestige Auto Body
Repairers, run by a Mr Stols (who gave expert evidence at the trial), had provided a
written quotation to repair the vehicle for R261 946, on 17 April 2012 – some months
before Davidson sold it to Motors. Stols testified that it had been involved in a major
accident, and that the repairs required were extensive. This evidence was not
gainsaid.

[11] It was also established that Davidson had in fact itself bought the vehicle
(together with a number of others) from a body shop, Plastic Rebuilders, for
R130 000. Mr Nicholas Davidson (Nicholas) had made these purchases and had
seen to the repair of the vehicle in the Davidson workshop. Davidson had spent
about R60 000 (possibly R70 000) on parts in order to repair the vehicle, and the

repair itself had taken some four to six weeks, although Davidson employees had not
worked on it continuously.

[12] It is thus clear that the vehicle had been involved in a major collision. And that
it substantially affected resale value was shown by the evidence led as to
Pommerel’s futile attempts to resell it to other dealers. He eventually succeeded in
selling it to a Mr C Hechter for R150 000. That was quite a high price in the
circumstances since the evidence of another dealer, also not gainsaid, was that
where a manufacturer’s warranty was cancelled one could sell a vehicle for only half
its book value, which would have been R130 000.

[13] Hechter testified that had he realized the extent of the damage he would not
have paid R150 000 for the vehicle. He spent a considerable sum of money repairing
it and eventually sold it at a profit.

[14] The evidence before the regional magistrate thus established without any
doubt that the vehicle had been involved in a major collision before the trade-in, and
that the resale value was substantially affected. What is disputed is whether the
statement in the trade-in declaration amounted to a warranty. Davidson argues that it
is too vague to be enforceable as a contractual term. And indeed the regional
magistrate had considered that the statement was merely one of opinion.

[15] That was clearly wrong. The statement formed part of a warranty termed as
such in the declaration. Warranties are binding terms of a contract. This proposition
is so trite that no authority is required to establish it. And it is not vague – the term in
the contract clearly indicates that a substantial or major accident is one that affects
resale value. Since Motors had established that the vehicle had been involved in a
major accident, and that resale value was indeed affected, that should have been the
end of the matter.

[16] However, it was argued that the contract should have been rectified since it
did not reflect the common continuing intention of the parties. Davidson had, as I
have said, counterclaimed for rectification of the contract so as to delete the two
warranty clauses in the conditions of sale and in the trade-in declaration, and to
include a clause reading:
‘The Transporter has been involved in an accident. Eastern Cape Motors shall undertake its
own investigation into the accident to determine whether the Transporter may be traded in or
not.’

[17] The regional magistrate did not consider the counterclaim and the evidence
certainly did not support the claim for rectification. In any event, Davidson did not
pursue a cross-appeal in respect of the claim for rectification, and there is no
evidence that supports Patrick’s limited evidence that Pommerel had undertaken to
investigate the extent of the damage to the vehicle himself.

[18] In the circumstances, there is no merit in the appeal to this court.  That brings
me to the question posed earlier in this judgment: That two judges of this court gave
special leave to appeal does not mean that we are not required to consider whether
we actually should be entertaining the appeal at all: National Union of Mineworkers v
Samancor Ltd [2011] ZASCA 74 para 15.  The normal criterion of reasonable
prospects of success applies to both ‘special leave’ and ‘leave’ (Westinghouse at
561E-F). Given that there is no merit at all in the appeal, there are no reasonable
prospects of success, much less special circumstances.

[19] Here, the amount in issue is minimal. There is no legal question to be
determined. There is no factual dispute that requires reconsideration. There is no
reason why an appellate court should determine any matter arising from the first
appeal further. Again, it is trite that where there has been no manifest denial of
justice, no important issue of law to be determined, and the matter is not of special
significance to the parties, and certainly not of any importance to the public

generally, special leave should not be granted. (See Westinghouse above and
National Union of Metalworkers of South Africa & others v Fry’s Metals (Pty) Ltd
[2005] ZASCA 39).

[20] As the matter fails to meet the threshold set for special leave, the appeal
should be struck from the roll.

[21] The appeal is struck from the roll with costs.

_________________________
C H Lewis
Judge of Appeal

Pillay D AJA (concurring separately)

[22] Two issues arise in this appeal. First, has the appellant shown that it did not
breach a warranty relating to its resale of a motor vehicle to the respondent?
Second, – a question the court raised – has the appellant shown special
circumstances to justify granting special leave to this court?  Only if the first question
is answered in favour of the appellant will the second question arise.

[23] By way of background, on 23 November 2012 the respondent, a car
dealership purchased a 2012 VW Transporter T5 motor vehicle from the appellant.
Mr P Davidson who represented the appellant informed Mr C W Pommerel, a car
salesman for the respondent, that the vehicle had been involved in an accident from
which it sustained damage. Taking account of its newness as a 2012 model, its low
odometer reading of 5 400 km, its general external appearance and the appellant’s
representations that the accident was ‘not bad’ or ‘minor’, the respondent settled on
the purchase price of R245 000 for the vehicle.

[24] The respondent attempted unsuccessfully to resell the vehicle. Eventually
Mr Pommerel asked Mr F McCloud, a dealer in pre-owned motor vehicles, to list the
vehicle on his online auction website. At Mr McCloud’s request, Mr Pommerel
ascertained the vehicle’s history from the Volkswagen Group South Africa (VW), the
manufacturers of the vehicle. From this history it emerged that VW had terminated its
maintenance plan and warranty effectively from 5 June 2012; VW had written off the
vehicle because of the damage it had sustained in an accident.

[25] No clarity was forthcoming from Mr Davidson about exactly what damage the
vehicle had sustained.  Eventually the respondent sold it. Then it instituted action for
the difference of R95 000 between the purchase price of R245 000 and the
R150 000 it recovered on resale. Its claim was founded on the breach of the
warranty in clause 7 of the trade-in declaration that read:
‘The vehicle has not been involved in a substantial/major accident (particularly if it will affect
resale value).’

[26] In the trial court the material facts to determine whether the damage to the
vehicle had been substantial became common cause. That VW wrote off the vehicle
and withdrew its warranty went uncontested. This fact alone showed conclusively
that the damage to the vehicle had been substantial. Accordingly, the appellant had
no prospects of success on appeal. But this is not all. The summary below of the
evidence from witnesses for both parties proved that the appellant had breached the
warranty.

[27] The evidence of the expert witness Mr Stoltz that the visible damage to the
vehicle amounted to some R261 946 was challenged only to the limited extent that
damage to the gearbox was superficial. Irrespective, and even if the cost of the
gearbox in the amount of R77 438 were deducted, the balance of the cost of repairs,
and accordingly the damage, was substantial.

[28] Fearing that if it delayed the sale into the next year, the vehicle would be
valued as an older model, the respondent hastened to sell it, but did so at a loss of
R95 000, thus proving that the damage affected its resale value. The uncontested
evidence of Mr McCloud that vehicles without a manufacturer’s warranty attracted no

more than half their trade-in value was further proof that the damage was
substantial.

[29] Mr Hechter, who purchased the vehicle, testified for the appellant that if he
had known of the accident damage he would not have paid R150 000 when he
bought it from the respondent. He resold it for R212 000 with a two-year warranty
after he had repaired it. Notwithstanding the repairs and the insurance, this price was
still lower than the R245 000 that the respondent had paid, another indication that
major accident damage affected the resale value of the vehicle.

[30] Mr N Davidson, representing the respondent had rebuilt the vehicle. He must
have known that the damage was major from both his observations and the price he
paid for it. He had paid R130 000 for the vehicle in the very year of its manufacture
when its book value was double the price. Spending another R70 000 in parts alone
excluding labour costs amounted to more than half the price that he had paid for it.
Mr P Davidson’s concession that the cost of R261 000 for the repairs would be for
major damage settled the dispute about the scale of the damage to the vehicle.

[31] On appeal, the appellant conceded that the damage was substantial but
denied that it had breached the warranty. It contended that the phrase
‘a substantial/major accident’ is incapable of ‘any objective meaning in the
circumstances, and is accordingly invalid due to vagueness.’ It persisted that the
trade-in declaration did not capture the intention of the parties. Pertinently to the
warranty in clause 7, the appellant contended that the parties had arranged that the
respondent would investigate the accident first before determining whether it would
accept the vehicle as a trade-in. As the full bench had not considered this factor, the
appellant submitted that this Court should intervene to reverse its decision.

[32] Despite the importance of the alleged agreement to inspect the vehicle before
concluding the purchase, the appellant abandoned its counter-claim for rectification
of their agreement to this effect. It did not attempt to resurrect its counter-claim by
cross-appealing; inevitably this ground of appeal is dead in the water. Contrary to the
submission for the appellant, the warranty is not vague or incapable of meaning;
manifestly the appellant warranted that the vehicle had not been involved in a major

accident. It breached the warranty; consequently, the respondent was entitled to
succeed in its claim.

[33] As to the question whether special leave to appeal should be granted, against
the overwhelming weight of evidence that the appellant had shown no prospects of
success whatsoever, its counsel sensibly conceded that it had also not shown
special circumstances. This concession disposes of the appeal.

[34] In conclusion, I emphasise that merely granting an application for special
leave to appeal on petition is not decisive of the question as to whether special
circumstances exist. The two judges considering petitions do not usually have the full
record of the proceedings in the court below. A full picture of the case sometimes
emerges only at the hearing of the special appeal. Ultimately the court considering
the appeal decides the question of special leave.  Hence I concur with the majority to
strike the matter from the roll with costs.

_______________________
D Pillay
Acting Judge of Appeal

APPEARANCES
For Appellant:

P Zietsman SC

Instructed by:

Fred Stemmett Attorneys c/o Neville Borman & Botha
Attorneys, Grahamstown

Symington & De Kok Attorneys, Bloemfontein

For Respondent:

J Nepgen

Instructed by:

Pagdens Attorneys, Grahamstown

Claude Reid Attorneys, Bloemfontein