BAK STORAGE (PVT) LTD v GRINDSBERG INVESTMENT (PVT) LTD

HIGH COURT, HARARE

[Special Case HH 837-15]

October 28, 2015

MAFUSIRE J

Lien – Charges for goods retained as – Types of and nature of rights created and conferred.

On a special case, the issue for determination was whether it was competent for a creditor who was enforcing a right of retention to raise storage charges incurred as a result of the exercise by such creditor of his right to retention. Dismissing the claim.

Held, that a lien is a weapon of defence enabling or entitling the defendant to retain goods until paid his costs of improvements done on those goods, or his costs for keeping or preserving them. The defendant is entitled to be reimbursed his actual costs, not to charge a profit for retaining the goods. A lien is a form of security, it does not create a cause of action.

Held, further, that the lien holder’s claim is confined only to such costs as the owner of the goods would otherwise have incurred himself.

Cases cited:

Anderson & Co v Pienaar & Co 1922 TPD 435, applied

Brooklyn House Furnishers (Pty) Ltd v Knoetze and Sons 1970 (3) SA 264 (A), applied

Colonial Cabinet Manufacturing Co v Wiid 1927 CPD 198, applied

Ford v Reed Bros 1922 TPD 266, applied

Syfrets Participation Bond Managers Ltd v Estate and Co-Op Wine Distributors (Pty) Ltd 1989 (1) SA 106 (W), applied

United Building Society v Smookler’s Trustees and Golombick’s Trustees 1906 TS 623, applied

Book cited:

Badenhorst PJ, Pienaar JM and Mostert H Silberberg and Schoeman’s The Law of Property (5th edn, Lexis Nexis Butterworths, Durban, 2006) at pp 412-415, 420-421.

T Zhuwarara, for the plaintiff

J Samukange, for the defendant

MAFUSIRE J:

There was a principal claim in respect of which this matter was referred to trial. In court, and at the commencement of the proceedings, the parties settled that claim. They filed a Deed of Settlement. Unfortunately, that did not conclude the matter. There was a residual aspect. It was agreed to proceed with that as a special case. In respect of it, the parties would, among other things, file a statement of agreed facts and heads of argument. Thereafter, I would determine the matter on the papers, or issue a directive on the way forward, if it was not possible to conclude it on the papers. Regrettably, the record was returned to the registry soon after that arrangement. The matter was all but forgotten until about five months later when the plaintiff started making enquiries. That accounts for the delay in delivering this judgment on the special case.

The details of the case were these. Initially the plaintiff claimed US$ 174 932 said to be the balance of handling charges, warehousing costs and storage fees in respect of certain goods belonging to the defendant, mainly bulk sugar, rice, cooking oil and soya meal.

In its plea the defendant, in essence, confessed and avoided. The contract between the parties was admitted. That the plaintiff had carried out some of the services was also admitted, albeit tacitly. But the quantum was vigorously contested. The defendant averred, among other things, that it had paid for all such services as the plaintiff had actually carried out on its behalf.

In its replication the plaintiff disputed the defendant’s averments and stuck to its original claim. Subsequently, just before the pre-trial conference, the plaintiff amended its claim to add an additional claim for further storage fees at the rate of US$ 20 000 per month from April 2014 to the date when the defendant’s goods would clear the plaintiff’s warehouse.

The defendant did not plead to the plaintiff’s amended claim. At the pre-trial conference, the plaintiff’s amendment was allowed by consent. The issues for trial were listed as follows:

• whether or not the defendant is liable to the plaintiff in the sum of US$ 174 932 or any amount;

• whether or not the plaintiff is entitled to charge damages for goods that it is holding as [a] lien and if so what amount is it entitled to recover from the defendant?

After that the matter was set down for trial. As said already, the parties settled the first issue. The plaintiff’s principal claim had reduced to only US$ 43 570. The Deed of Settlement was essentially a payment plan by the defendant to discharge this amount. The deed was also an agreement by the plaintiff to release, in stages, certain of the defendant’s goods still held in storage. The parties further agreed as follows:

“A further 389.5 tonnes [of brown sugar] shall be held as security for Plaintiff’s claim for damages under HC 4472/14 pending a determination by the judge.”

HC 4472/14 is, of course, this case.

The parties went on to file a statement of agreed facts and heads of argument for and against the claim for US$ 20 000 per month. In the statement of agreed facts, the parties acknowledged that the plaintiff had been storing defendant’s goods from January 2013 to 12 February 2015. Undoubtedly, 12 February 2015 was specifically mentioned because that was the date of the Deed of Settlement. The statement of agreed facts went on to record that since 25 April 2014, the plaintiff had been holding the defendant’s goods pending payment of the outstanding storage charges. It was also recorded that:

“Plaintiff is claiming US$ 20 000 a month from 25 April 2014 as damages, being storage charges and other expenses incurred by the plaintiff for the goods held in storage.”

Finally, the statement of agreed facts had the following statement, which is the gravamen of the defence, and of the whole case on the residual aspect:

“The Defendant denies that Plaintiff is entitled at law to charge storage for goods retained as a lien.”

Heads of argument filed by the plaintiff seemed to confuse the issue somewhat. They mixed up the right of retention, ie a lien, with the right to damages for storage charges. It seems to me that the plaintiff assumed the two to be one and the same thing, perhaps in the circumstances of this case. But they were not.

On the other hand, the defendant has been very clear. Its crisp position has been that the plaintiff was not entitled to claim storage charges for goods that it was holding as a lien because in that situation the goods were being held for the plaintiff’s own benefit. That, to me, was the crux of the matter.

In my view, the plaintiff’s claim of US$ 20 000 per month as damages or storage fees for the remaining goods that it had embargoed in its warehouse as a lien was misplaced for a number reasons, not least the fact that it is not the function of a lien to enable a warehouse keeper to found a claim for the commercial charges for storage that he would ordinarily be entitled to on warehousing a customer’s goods. A lien is a weapon of defence enabling or entitling the defendant to retain the goods until paid his costs of improvements done on those goods, or his costs for keeping or preserving them. The defendant is entitled to be reimbursed his actual costs, not to charge a profit for retaining the goods.

The plaintiff’s claim was also misplaced in that the basis for damages as storage fees at the rate of US$ 20 000 per month was not set out.

I now proceed to deal with these two issues, namely, why the plaintiff could not found a claim for damages or storage fees by reason of its lien, and why I say the rate of claim had no foundation anyway.

 

(a) Lien not the foundation for a commercial claim

A lien is a right of retention, jus retentionis. It is some form of self-help that arises by operation of the law. It accrues to the possessor of someone’s property over which he has incurred expenses. The possessor is entitled to retain, or, in the case of an immovable property, to occupy, the property until he has been duly compensated for his expenses. The lien is a form of security. It does not create a cause of action. It merely affords a defence against the owner’s vindicatory action, rei vindicatio. The compensation may be in the agreed amount. If there is no agreement, it constitutes actual expenditure, or the extent to which the owner of the goods may have been unjustly enriched at the expense of the possessor: See United Building Society v Smookler’s Trustees and Golombick’s Trustees 1906 TS 623 at 628; Ford v Reed Bros 1922 TPD 266; Anderson & Co v Pienaar & Co 1922 TPD 435; Brooklyn House Furnishers (Pty) Ltd v Knoetze and Sons 1970 (3) SA 264 (A) at 270E-F and Syfrets Participation Bond Managers Ltd v Estate and Co-Op Wine Distributors (Pty) Ltd 1989 (1) SA 106 (W) at 109H-J.

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