The tension between the right of ownership and lien in security for a debt

27 July 2023 339
Law often requires a balancing of two different competing rights, requiring our courts to take a view based on law or the relevant facts to decide which right trumps which. In a recent High Court case the court had to consider in the circumstances of the case whether our common law right or rei vindicatio which allows an owner to recover possession of his asset trumps the common law lien or legal claim against an asset held as security for a debt. 

In this case the Applicant, a financial institution, entered into a vehicle sale agreement with the Second Respondent in terms of which the Applicant would remain the owner of the vehicle until the vehicle have been fully paid for. The Applicant therefore remained the owner of the vehicle as the Second Respondent had not settled the full purchase price. 

The Second Respondent failed to make the agreed payments on the vehicle, resulting in the Applicant issuing a summons for repossession of the vehicle. The Applicant succeeded in obtaining a warrant for the delivery of the vehicle. 

However, the vehicle was in the possession of the First Respondent, a panel beater, who refused to return the vehicle claiming a lien over the vehicle as security for unpaid storage costs in respect of the vehicle due to an agreement between the Second Respondent and the panel beater that the vehicle be stored by the panel beater on behalf of the Second Respondent. The Applicant however had no knowledge of this agreement and was not a party thereto.

The Applicant, as the owner of the vehicle, applied for the return of the vehicle from the panel beater citing the common law remedy of rei vindicatio. However, the panel beater opposed the application citing the lien as the reason for its retention of the vehicle, and also claiming that both the Applicant and Second Respondent were indebted to it for the storage of the vehicle.

The Court however found that the panel beater could not prove the existence of a contract for storage between it and the Applicant and accordingly no ground existed for enforcing a debtor and creditor lien  against the Applicant for storage costs and also that the Applicant could not be held ransom to an agreement between the panel beater and Second Respondent to which it was not a party. 

Accordingly, the Court found in favour of the Applicant and ordered the return of the vehicle thereby confirming that in this case, the rei vindicatio trumped any lien the panel beater may have had against the Second Respondent. 

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