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Quick Cash (Pty) Ltd Trading as Cash Point v Molome and Another (Civil Appeal No. 21 of 201) [2003] BWCA 2 (1 January 2003)

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IN THE COURT OF APPEAL OF BOTSWANA
HELD AT LOBATSE
Court of Appeal Civil Appeal No. 21 of 2001 High Court Misc. Application No. 519 of 2000
In the matter between:
QUICK CASH (PTY) LTD     Appellant
(Trading as Cash Point)
and
KENTSE MOLOME    First Respondent
THATAYAONE MMATLI        Second Respondent
Mr. D. A. Bregman SC with him Ms. M. Garekwe for the Appellant
Mr. M. Torto for the First Respondent
No appearance for the Second Respondent
JUDGMENT
CORAM: AKIWUMI J.A.
GROSSKOPF J.A. NGANUNU (C.J.) J.A.
GROSSKOPF. J.A.
The first respondent ("the borrower") brought an application against the appellant ("the lender") and the second respondent ("the purchaser") for an order setting aside an agreement of sale whereby the lender sold the borrower's Toyota Hilux 4x4 motor vehicle ("the vehicle") to the purchaser. The lender opposed the application and contended that it was entitled to sell the vehicle, which had been pledged to it by the borrower, inasmuch as the borrower had forfeited her right to the vehicle in terms of the loan agreement

("the loan agreement") entered into between it and the borrower. The purchaser abided the Court's decision.
The Court a quo held that the provisions of the loan agreement, which
provided that the borrower would forfeit his right to the vehicle on default of
due repayment, constituted an illegal and unenforceable pactum
commissorium. The following order was made by the Court a quo:
"(a) The sale agreement entered into between the 1st and 2nd Respondents in respect of the sale of the Applicant's vehicle being a Toyota Hilux 4x4 registration No B217 AAJ is hereby set aside.
(b)    
The 2nd Respondent is directed to return and transfer registered ownership of the aforesaid vehicle to the Applicant against payment to him by the Applicant of compensation for reasonable improvements effected on the vehicle by him, and against payment of the sum of PI2000-00 (Twelve Thousand Pula) by Applicant to 1st Respondent.
(c)    
The 1st Respondent is to pay the costs of the application on a scale as between party and party."
The loan agreement provided that if the borrower should fail to repay the loan and finance charges on or before the due date the borrower would forfeit his right to the vehicle and the lender would be entitled to deal with it "in whatever manner he sees appropriate" ("the forfeiture clause".)
Mr Bregman, who appeared for the lender as appellant, conceded that the forfeiture clause was tantamount to an invalid and unenforceable pactum commissorium and that the lender could not rely on it. This concession was rightly made in my view. The authorities are clear on the invalidity of a
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pactum commissorium (Mapenduka v Ashington 1919 A.D. 343 at 351; Sun Life Assurance Co. of Canada v. Kuranda 1924 AD 20 at 24; Sasfin (Ptv) Ltd v Beukes 1989 (1) SA 1 (A) at 14 C - D). Counsel submitted, however, that the loan agreement was not a conventional money lending transaction whereby the pledgee was only entitled to sell the pledged article if the money lending agreement contained an agreement for parate executie. An agreement for parate executie or summary execution of movables pledged and delivered to the pledgee is as a rule valid, provided there is no prejudice to the debtor (Osry v Hirsch. Loubser & Co. Ltd. 1922 CPD 531 at 547; Sasfin's case supra at 14 D - E; Sakala v Wamambo and Another 1991 (4) SA 144 (ZHC) at 147 I). According to counsel's submission the loan agreement was in fact a pawnbroking transaction whereby the lender was entitled as of right to sell the vehicle on behalf of the borrower, irrespective of whether there was an agreement for parate executie.
This was certainly not the lender's case in the Court a quo where it relied solely on the forfeiture clause. Nowhere did the lender allege that the loan agreement impliedly allowed him the right to sell on default of payment. Counsel nevertheless tried to persuade us that the lender was legally entitled in terms of the laws of Botswana to sell the vehicle as of right.
The laws which were in force in the Colony of the Cape of Good Hope on 10 June 1891 became the laws of the then Protectorate of Bechuanaland (Justice Akinola Aguda, Legal Development in Botswana from 1885 to 1966, 1975 Botswana Notes and Records, 52). Roman Dutch Law and the relevant
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Cape Statutes thereby became the law of this country at the time. Counsel could not refer us to any Roman Dutch authority or relevant Botswana Statutory provision in support of his argument. He sought, however, to rely on the provisions of the Pawnbrokers' Act 1889, of the Cape of Good Hope ("the Act"), and more particularly on the pawnbroker's right in terms of the Act to sell the pawned article. Counsel conceded that the provisions of the Act did not apply where the loan by the pawnbroker exceeded ten pounds, but submitted that the lender in our case nevertheless fell within the definition of a pawnbroker in the Act and as such would have had the same automatic right of disposal at common law as a pawnbroker had under the Act. I do not agree. There is nothing to suggest that all pawnbrokers were entitled as of right to dispose of a pawned article. But in my view it would in any event not have assisted the lender, even if it had such a right of disposal, for the simple reason that a pawnbroker had no unconditional right in terms of the Act to sell or retain the pawned article. If the loan was for more than ten shillings the pawnbroker was not entitled to retain the pawned article. He could, however, dispose of it by public auction after due advertisement. The sale of the vehicle by the lender in the present case was clearly not by public auction after due advertisement.
We were also referred to the English common law as set forth in Halsbury's
Laws of England, fourth edition reissue, 1999, Vol. 36 (1), para. 101 et seq.
Para. 127 deals with the pawnee's power of sale as follows:
"The contract of pawn carries with it an implication that the security may be made available to satisfy the obligation. Under
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this implication a pawnee has a power of sale on default of payment if the time for payment has been fixed."
The pawnee must however account to the pawnor for any surplus after paying the debt.
That may be the position at common law in England, but the common law of
Botswana does not allow a pawnee to sell the pawned article in the absence
of an agreement for parate executie. In Mercantile Bank of India Ltd and
Another v Davis 1947 (2) SA 723 (C) at 736 the Court held:
"In the absence of an express agreement for parate execution, a pledgee is not under our law entitled to sell the pledged property without prior recourse to the Court".
It is common cause that there was no such express agreement for parate
executie in the present case. Had there been such an agreement the lender
would in any event have been obliged to account to the borrower for any
surplus after paying the debt. That was not done by the lender. The
lender's attitude was that the right in the vehicle had been forfeited and that
it could therefore keep it or sell it for its sole benefit.
I am accordingly of the view that the lender was not entitled to sell the vehicle and that the order of the Court a quo should be upheld.
In the result the appeal is dismissed with costs.
DELIVERED IN OPEN COURT AT LOBATSE ON THE .... DAY OF JANUARY 2003.
F. H. GROSSKOPF JUDGE OF APPEAL
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I agree,
A. M. AKIWUMI JUDGE OF APPEAL


I agree,
J. M. NGANUNU (CHIEF JUSTICE) JUDGE OF APPEAL

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