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Lawful ownership and the defence of Estoppel

 

Dealership A purchases a vehicle from another dealership, B, who in turn creates the impression that he is the lawful owner of the vehicle as he has a mandate to sell the vehicle on behalf of person C. In that regard dealership B represents person C as his agent. Dealership A takes delivery of the vehicle as payment for money owing to it by dealership B and never settles with person C. Upon realising that dealership B had delivered the vehicle to dealership A as payment for its indebtedness, person C requests that seizure of the vehicle be authorised.

Many similar circumstances exist or are conceivable and it is necessary for third parties to distinguish between the different proprietary relationships of the different parties involved in such transactions. In the above example, each party, and possibly more parties will be vested with certain rights to the motor vehicle.

It would seem as though both dealership A and person C were swindled by dealership B and it would only be fair if a simple remedy is available for both parties which offers relief for both simultaneously. However, once a legal battle has started, dealership A and person C will be seeking relief against each other before taking aim at the inciter.

Depending on the particular circumstances, an extraordinary and fit defence is available to dealership A, being the defence of Estoppel. As it was at all times acting in good faith under the impression that dealership B is the true owner without taking notice of the inter partes agreement between person C and dealership B, dealership A should approach the court in an application declaring that it is the common law owner of the vehicle and is therefore entitled to the free and undisturbed possession of the vehicle and that the true owner is estopped from asserting any rights to the vehicle. Any court will take in regard the bona fides of dealership A when considering such application and will probably grant such relief.

The original owner, being person C, will have to exercise his rights more patiently and recover the damages he suffered as a result of dealership B’s conduct by suing for breach of contract, alternatively request return of the vehicle after tendering compensation for the loss to dealership A.

Estoppel would proof to be an invaluable defence, albeit only to the bona fide owner avoiding involvement in unlawful transactions.

Douw G Breed, director at Barnard Incorporated.

Barnard Incorporated is a firm of attorneys situated in Centurion, Pretoria.

 
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