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[2016] ZASCA 175
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Brodsky Trading 224CC v Cronimet Chrome Mining SA (Pty) Ltd and Others (39/2016) [2016] ZASCA 175; 2017 (4) SA 610 (SCA) (25 November 2016)
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THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 39/2016
In
the matter between:
BRODSKY
TRADING
224CC
APPELLANT
and
CRONIMET
CHROME MINING SA (PTY) LTD
FIRST RESPONDENT
CRONIMET
CHROME SA (PTY) LTD
SECOND RESPONDENT
CRONIMET
CHROME PROPERTIES SA (PTY) LTD
THIRD RESPONDENT
Neutral
citation
:
Brodsky
Trading 224CC v Cronimet Chrome Mining SA
(39/2016)
[2016] ZASCA 175
(25
November 2016)
Coram
:
Cachalia, Petse, Swain, Mathopo and Mocumie JJA
Heard
:
7 November 2016
Delivered:
25
November 2016
Summary:
Estate
Agency Affairs Act 112 of 1976 – estate agent company converted
to close corporation in terms of
s 27
of the
Close Corporations Act
69 of 1984
– Estate Agency Affairs Board not advised of
conversion – fidelity fund certificate issued to non-existent
company
– certificate invalid – close corporation
precluded from recovering commission.
ORDER
On
appeal from:
Gauteng
Division of the High Court, Pretoria
(Tolmay
J sitting as court of first instance).
The
appeal is dismissed with costs, including the costs of two counsel.
JUDGMENT
Swain
JA
(Cachalia,
Petse, Mathopo and Mocumie JJA concurring):
[1]
The
appellant, Brodsky Trading 224CC, instituted action for the recovery
of estate agent’s commission against the first respondent,
Cronimet Chrome Mining SA (Pty) Ltd as fourth defendant, the second
respondent Cronimet Chrome SA (Pty) Ltd as eighth defendant,
the
third respondent Cronimet Chrome Properties (Pty) Ltd as ninth
defendant (collectively referred to as the respondents) together
with
six other defendants in the Gauteng Division, Pretoria (Tolmay J).
[1]
[2]
At
the initial hearing before the court a quo two issues were separated
for determination in terms of Uniform
rule 33(4).
The first issue was
whether the appellant had complied with s 26 of the Estate Agency
Affairs Act 112 of 1976 (the Act) and the
second was whether it had
complied with s 34A(1) and (2) of the Act. Section 26 prohibits any
person from performing any act as
an estate agent, unless a valid
fidelity fund certificate (certificate) has been issued to him or
her. In terms of s 34A read with
the definition of ‘estate
agent’ in s 1, no estate agent is entitled to any remuneration
for any work, unless at the
time the work was performed a valid
certificate had been issued to the estate agent concerned.
[3]
The
court a quo issued a declaratory order to the effect that the
appellant had ‘substantially complied’ with these
provisions, and then granted leave to the respondents to appeal
against this finding. This court, however, decided that the issue
was
not appealable and the matter was struck from the roll. It would be a
fruitless exercise if the court a quo ultimately decided
that the Act
and hence the need for a valid certificate did not apply to the
transaction, or to a large part of it on the basis
that it did not
fall within the definition of ‘business undertaking’ in s
1 of the Act. In the absence of a determination
of this issue by the
court a quo, the order was not definitive of the rights of the
parties and would not dispose of a substantial
part of the relief
claimed.
[2]
[4]
At
the resumed hearing the court a quo, after hearing evidence on the
merits, decided that what was sold was indeed a ‘business
undertaking’. In the light of its previous conclusion that the
appellant had substantially complied with the requirements
of the Act
regarding the validity of the certificates, it decided that the
appellant was not precluded from recovering commission.
However, on
the merits of the claim, it found that the appellant had failed to
prove that the first respondent had granted a mandate
to it to sell
the shares, property and permits and dismissed the action. Leave to
appeal to this court was thereafter granted by
the court a quo.
[5]
The
appellant makes the following submissions with regard to its
entitlement, to claim commission:
(a)
It supports the
court a quo’s finding that it substantially complied
with the
requirements of the Act regarding its possession of a valid
certificate, but
(b)
Submits that the
court a quo erred in finding that the sale of the shares held
by the
first, second and third defendants in the first respondent, to the
second respondent, constituted the sale of a ‘business
undertaking’ as contemplated in s 1
(a)
(i) of the Act.
[6]
The
respondents, however, contend that the court a quo erred in
concluding that the appellant had substantially complied with the
requirements of the Act. This remains an issue in the appeal as it
was not dealt with by this court at the previous hearing. It
is also
submitted that the court a quo correctly concluded that what was
sold, was indeed a ‘business undertaking’
in terms of the
Act.
[7]
The
evidence of relevance to these issues is as follows. A certificate
was issued on 6 May 2005 to a company Brodsky Trading 224
(Pty) Ltd,
which was valid until 31 December 2005. According to Mr Brian Maree,
a director, the company was converted in terms
of s 27 of the Close
Corporations Act 69 of 1984 (the CC Act) to the appellant, Brodsky
Trading 224CC, a close corporation, as
from 20 March 2006. No valid
certificate was issued to the company or its directors, or to the
close corporation or its members,
for any period during 2006. On 6
May 2007 a certificate was issued to Brodsky Trading 224 (Pty) Ltd
(the non-existent company),
but not to the appellant, Brodsky Trading
224CC. On the same date a certificate was issued to Mr Maree in his
former capacity as
a director of Brodsky Trading 224 (Pty) Ltd and
similarly not in his capacity as a member of the appellant, Brodsky
Trading 224CC.
[8]
Mr
Maree believed he did not receive a valid certificate for 2006
because, according to him, there were years when he did not receive
certificates from the Estate Agency Affairs Board (the Board). It was
possible, he speculated, that 2006 was one of those years
and that if
a valid certificate had been issued, it would have been among the
documents he had discovered. He initially stated
that he could not
recollect whether he had informed the Board of the change in the
nature of his business from a company to a close
corporation.
However, when cross-examined he conceded that it could be accepted
that he did not tell the Board of the conversion.
He also conceded
that from the beginning of 2007 until 6 May 2007, there was no valid
certificate in existence for the appellant.
In addition, from that
date until the end of 2007, the certificate was in respect of a
company that no longer existed. He also
accepted that from 6 May 2007
to the end of the year, the certificate was issued to him in his
capacity as a director of this non-existent
company.
[9]
According
to the appellant’s amended particulars of claim, the seller’s
mandate (including an entitlement to 10 per
cent commission) was
granted to the appellant and accepted by Mr Maree and Mr Hennie Human
on behalf of the appellant, on 15 March
2007. In evidence Mr Maree
stated that the mandate was in fact granted on 12 March 2007. The
appellant alleged that pursuant to
this mandate it commenced
marketing the seller’s interests to potential purchasers. It
found the sixth defendant, Mr Niemöller,
as a potential
purchaser, and introduced him to the sellers. Mr Maree stated that
the commission was earned on 14 May 2007, when
the introduction took
place.
[10]
It
is clear that neither the appellant nor its director, Mr Maree, were
in possession of a valid certificate when the mandate was
allegedly
granted to and accepted by it on 15 March 2007. The certificate that
was issued two months later, on 6 May 2007, eight
days before 15 May
2007 (when it is claimed the commission was earned) was, however, not
issued to the close corporation, but to
the non-existent company. In
addition, no valid certificate was issued to Mr Maree in his capacity
as a member of the close corporation;
it was issued to him in his
capacity as a former director of the non-existent company.
[11]
It
is apparent that the conclusion of the court a quo that the appellant
had substantially complied with ss 26 and 34A of the Act,
was based
primarily on the provisions of s 27(5) of the CC Act. This section
provides for the vesting of the assets, rights, liabilities
and
obligations of the company in the corporation and s 27(5)
(b)
provides that ‘. . . any other thing done by or in respect of
the company shall be deemed to have been done by or in respect
of the
corporation’. Section 38(5)
(d)
provides that ‘the juristic person which prior to the
conversion of a company into a corporation existed as a company,
shall
notwithstanding the conversion continue to exist as a juristic
person but in the form of a corporation’.
[12]
It
is, however, vital to recognise that although the juristic person
that existed before the conversion, in the form of a company,
continues to exist in the form of a close corporation, the company
ceased to exist as at the date of conversion. Section 29B of
the
Companies Act 61 of 1973 provides that:
‘
When
a company is converted into a close corporation in terms of the
Close
Corporations Act, 1984
, the Registrar shall, simultaneously with the
registration of the founding statement of the close corporation by
the Registrar
of Close Corporations in terms of the said Act, cancel
the registration of the memorandum and articles of association of the
company
concerned.’
[13]
For
a right to be transferred from the company to the close corporation,
it must have been held by the company at the time of conversion.
Likewise ‘any other thing done by or in respect of the company’
would have to be done at a time when the company was
in existence for
it to be deemed to have been done in respect of the corporation. On
20 March 2006, being the date of conversion,
the company, however,
was not in possession of a valid certificate that could be
transferred to the corporation. In addition, nothing
had been done
by, or in respect of the company before its conversion, with regard
to an application for a certificate in terms
of s 16 of the Act,
which could be transferred to the appellant.
[14]
The
court a quo accordingly erred in concluding that the non-existent
company possessed any rights in and to a valid certificate
that could
be transferred to the appellant. The court a quo’s decision was
based in part upon this erroneous conclusion,
but it also reasoned
that:
‘
.
. . the fidelity fund certificates issued in the name of the company
and Mr Maree as director will provide for the protection
of the
public’s interest as envisaged by the Act. Seeing that the
object of the Act is to protect the public from unscrupulous
estate
agents, the object of the Act has been fulfilled.’
[15]
The
general object of the Act was described by this court in
Rogut
v Rogut
1982 (3) SA 928
(A) at 939C in the following terms:
‘
The
general object of the Act was to protect the public against some
persons by requiring all estate agents, as defined, to take
out a
fidelity fund guarantee (which is not granted automatically); and to
pay the levies and contributions; and by requiring all
estate agents
to keep necessary accounting records and to cause them to be audited
by an auditor, and by obliging every estate
agent to open and keep a
separate trust account with a bank and forthwith to deposit therein
the moneys held or received by him
on account of any person.’
[16]
The
objectives of the Act with regard to the issue and validity of
certificates are encapsulated in several of its provisions, namely
ss
1, 16, 26 and 34A which, in their relevant parts, provide as follows:
‘
Section
1
“
estate
agent” –
(a)
means any person who
for the acquisition of gain on his own account or in partnership,
in
any manner holds himself out as a person who, or directly or
indirectly advertises that he, on the instructions of or on behalf
of
any other person –
(i)
sells or purchases or publicly exhibits for sale immovable property
or any business undertaking or negotiates in connection
therewith or
canvasses or undertakes or offers to canvas a seller or purchaser
therefor; or . . .
(b)
for purposes of section 3(2)(a), includes any director of a company
or
a member who is competent and entitled to take part in the running
of the business and the management, or a manager who is an officer,
of a close corporation which is an estate agent as defined in
paragraph (a);
(c)
for purposes of
sections 7, 8, 9, 12, 15, 16, 18, 19, 21, 26, 27, 30, 33 and
34B,
includes –
(i)
any director of a company, or a member referred to in paragraph (b),
of a close corporation which is an estate agent as
defined in
paragraph (a); and
(ii)
any person who is employed by an estate agent as defined in paragraph
(a) and performs on his behalf any act referred
to in subparagraph
(i) or (ii) of the said paragraph.
16.
Applications for and issue of fidelity fund certificates and
registration certificates.
(1)
Every estate agent or prospective estate agent, excluding an estate
agent
referred to in paragraph (cA) of the definition of “estate
agent” in section 1, shall, within the prescribed period
and in
the prescribed manner, apply to the board for a fidelity fund
certificate, and such application shall be accompanied by
the levies
referred to in section 9(1)(a) and the contribution referred to in
section 15.
(2)
. . .
(3)
Subject to sections 28(1), 28(5) and 30(6), if the board upon receipt
of any application referred to in subsection (1) or (2) and the
levies and contribution referred to in those subsections, is
satisfied
that the applicant concerned is not disqualified in terms
of section 27 from being issued with a fidelity fund certificate, the
board shall in the prescribed form issue to the applicant concerned a
fidelity fund certificate or a registration certificate,
as the case
may be, which shall be valid until 31 December of the year to which
such application relates.
(4)
No fidelity fund
certificate or registration certificate shall be issued unless
and
until the provisions of this Act are complied with, and any fidelity
fund certificate and registration certificate issued in
contravention
of the provisions of this Act shall be invalid and shall be returned
to the board at its request.
(5)
. . .
26.
Prohibition of rendering of services as estate agent in certain
circumstances.
–
No
person shall perform any act as an estate agent unless a valid
fidelity fund certificate has been issued to him or her and to
every
person employed by him or her as an estate agent and, if such person
is –
(a)
a company, to every director of that company; or
(b)
a close corporation , to every member referred to in paragraph (b) of
the definition of “estate agent” of
the corporation.
34A.
Estate agent not entitled to remuneration in certain circumstances.
–
(1)
No estate agent shall be entitled to any remuneration or other
payment
in respect of or arising from the performance of any act
referred to in subparagraph (i), (ii), (iii) or (iv) of paragraph (a)
of the definition of “estate agent”, unless at the time
of the performance of the act a valid fidelity fund certificate
has
been issued –
(a)
to such estate agent; and
(b)
if such estate agent is a company, to every director of such company
or, if such estate agent is a close corporation,
to every member
referred to in paragraph (b) of the definition of “estate
agent” of such corporation.
(2)
No person referred to in paragraph (c)(ii) of the definition of
“estate
agent”, and no estate agent who employs such
person, shall be entitled to any remuneration or other payment in
respect of
or arising from the performance by such person of any act
referred to in that paragraph, unless at the time of the performance
of the act a valid fidelity fund certificate has been issued to such
person.’
[17]
A
company or a close corporation may accordingly fall within the
definition of an ‘estate agent’ in terms of s 1
(a)
read with ss 1
(b)
and
(c)
.
In addition, a clear distinction is drawn in ss 26 and 34A between
companies and close corporations that are estate agents and
the
requirement that directors of companies and members of close
corporations, be in possession of valid certificates.
[18]
As
regards the requirement in s 16(1) that every estate agent must
within the prescribed period and in the prescribed manner apply
to
the Board for a valid certificate, Mr Maree stated that the Board
sent out renewal notices for the following year to estate
agents in
October of each year. Indeed, Regulation 4 of the regulations
published in terms of s 33 of the Act
[3]
provides as follows:
‘
4.
(1) Every estate agent to whom a fidelity fund
certificate or a registration certificate has been issued in
respect
of a specific calendar year shall, unless he has ceased or will cease
before the end of that year to operate as an estate
agent and has
advised the [B]oard of such fact in the prescribed manner, by not
later than 31 October of that year, apply to the
[B]oard for the
issue to him of a fidelity fund certificate or registration
certificate, as the case may be, in respect of the
immediately
succeeding calendar year.’
[19]
The
certificates issued on 6 May 2007 contain the following endorsement:
‘
This
is to certify that subject to the provisions of Act 112 of 1976
the
person whose name appears on this certificate
has complied with the provisions of s 16 of Act 112 of 1976 and the
regulations promulgated in terms of the said section.’
(Emphasis
added.)
[20]
Section
16(4) provides that no certificate shall be issued unless and until
the provisions of the Act are complied with. As from
the date of
conversion, being 20 March 2006, the company no longer existed. When
application was made for a renewal of the certificates
in 2007 it
must have been made in the name of the company, because Mr Maree
conceded that he had not told the Board of the conversion.
The
application was accordingly made by a non-existent company, Brodsky
Trading 224 (Pty) Ltd, which no longer qualified as an
‘estate
agent’ in terms of the Act. The certificate therefore purported
to certify compliance with the requirements
of the Act by a
non-existent company, in the guise of an ‘estate agent’.
[21]
Section
16(4) of the Act provides that any certificate issued in
contravention of the Act shall be invalid. The issue of the
certificate
to the non-existent company was accordingly invalid. In
addition, the issue of a certificate to Mr Maree in his capacity as a
director
of the non-existent company, and not in his capacity as a
member of the appellant, did not comply with s 16 of the Act and was
also invalid. In terms of s 26 of the Act, every director of a
company and every member of a close corporation, is required to have
a valid certificate. In their absence the company or close
corporation concerned is not entitled to receive any remuneration in
terms of s 34A of the Act. On this additional ground the appellant is
precluded from recovering any remuneration.
[22]
This
is not simply an issue of nomenclature, or a misdescription in the
name of the certificate holder, but one of substance. The
objectives
of the Act are not fulfilled by the issue of invalid certificates by
the Board as they play a central role in ensuring
that estate agents
comply with its provisions. There was accordingly no basis for the
court a quo to conclude that the appellant
had substantially complied
with its requirements.
[23]
I
turn to the issue of whether the sale of the shares held by the
first, second and third defendants in the first respondent, to
the
second respondent, constituted the sale of a ‘business
undertaking’ as contemplated in s 1
(a)
(i)
of the Act. If not, the appellant would only be precluded from
receiving commission in respect of the sale of the immovable
property, and not in respect of the sale of the shares and permits.
[24]
In
Moodley
v Estate Agents Board
1982 (4) SA 257
(D) at 261G the meaning of a ‘business
undertaking’ in the Act was described as follows:
‘
But
it is quite clear that the reference to “business undertaking”
in the definition section must mean the entire undertaking
of a
business and not any transaction which a businessman may enter into
or any individual transaction in the course of the business.’
[25]
The
court a quo found that the appellant in its particulars of claim
alleged that the seller’s mandate was to ‘find
a
purchaser for their interests in the whole of the mining operation
conducted by them’ inclusive of their shareholding in
the first
respondent, as well as the immovable property described as Vlakpoort
no 38, and the crushing permit. It was also alleged
that the
defendants were ‘desirous of acquiring mining rights in a
chrome mining operation, which they intended pursuing
and exploiting
jointly’. The court a quo concluded that the evidence was that
‘essentially the whole of the business
of the sellers were
sold’.
[26]
Mrs
Nel, one of the sellers, stated that up until 6 February 2008, income
was earned from the sale of minerals. If they had not
sold the shares
in the company, Platinum Mile Investments 594 (Pty) Ltd, to the
second respondent, they would have continued to
mine and sell chrome.
She agreed that it was a business with active bank accounts and
auditors and that profits were made from
the recovery of chrome.
Together with the other shareholders in the company, they were the
owners of a chrome mine business that
they decided to sell. The
manner in which the business was sold was to sell the shares in the
company to the second respondent.
One of the objects of the sale
agreement was to sell the business and the purchase price was not
only for the immovable property,
but also included the business. She
agreed with the proposition that the appellant claimed commission not
only in respect of the
sale of the land, but also for the sale of the
business.
[27]
At
the resumed hearing before the court a quo, Mrs Nel agreed that the
initial global price of R270 million was calculated on the
basis that
what was sold and bought, was a business undertaking. Mr Gunther
Weiss, the attorney representing the German company
Cronimet Mining
GmbH (Cronimet), which acquired a majority shareholding in the second
respondent, stated that the shares in the
first respondent were
purchased in order to acquire the company that owned the mining
permits. The permits were the core assets
of the whole mining
business. What was acquired were the shares in the first respondent,
the immovable property and the crushing
permit owned by the company
Night Fire Investments 110 (Pty) Ltd. These three assets formed the
mining business undertaking that
the purchasers wished to acquire.
Although the agreement included a share deal, it was a share deal
with the object of acquiring
a business.
[28]
The
issue is placed beyond doubt by several provisions in the sale
agreement. Paragraph G of the Recitals records that the purchasers
are interested in completing the proposed transaction ‘in order
to jointly establish a new, independent chrome mining and
refining
beneficiation site’. Clause 2.2 provides that the sale of the
shares includes ‘the right to receive profits
for the current
and all future financial years of the company (being Platinum Mile
Investments 594 (Pty) Ltd) and the right to
receive any profits of
the company which have not yet been distributed’. Under the
heading ‘interim period’ it
is recorded that the sellers
and or the company, shall ensure during the period between the
signing date and the closing date,
that ‘all necessary steps
are taken to protect the assets and business prospects of the company
and to preserve and retain
the mining permits and the goodwill of the
business’. These clauses are consistent with the subject of the
sale being a ‘business
undertaking’.
[29]
The
court a quo was therefore correct to conclude that the sale of the
shares fell within the ambit of a business undertaking as
contemplated in s 1
(a)
(i)
of the Act. In the result the appellant is not entitled to any
remuneration in terms of s 34A of the Act with regard to the
performance of the mandate, allegedly granted to it by the first
respondent to sell the shares, immovable property and permits.
This
conclusion renders it unnecessary to determine whether the court a
quo correctly concluded that the appellant had failed to
prove the
mandate upon which it relied. I shall, however, briefly deal with
this aspect.
[30]
The
cause of action originally pleaded by the appellant was of a mandate
granted by the sellers to the appellant to find a purchaser
with an
obligation on the part of the sellers to pay commission of ten per
cent upon the sale price on the conclusion of a valid
sale. This
cause of action was confirmed under oath by Mr Maree representing the
appellant, in a subsequent application for summary
judgment. It was
alleged that a contract was concluded on 14 May 2007 at the meeting
where Mr Niemöller and nine other persons
(mostly German
businessmen) representing the purchasers met with Mr Maree and Mr
Herman Viljoen, representing the appellant and
Mr and Mrs Nel,
representing the sellers. It was alleged that the purchasers,
represented by Mr Niemöller, confirmed that
the appellant had
been the effective cause of the introduction, had earned its
commission and was entitled to payment. The purchasers
would
thereafter deal directly with the sellers and the purchasers agreed
to pay, or procure payment of the commission directly
to the
appellant in the event of a sale of the sellers’ interests to
the purchasers (or any of them). It was also alleged
that the
sellers’ mandate was orally amended in that instead of the
appellant’s commission being payable by the sellers,
it would
be payable directly by the purchasers.
[31]
On
this pleaded cause of action the appellant relied upon an agreement
concluded with the purchasers, represented by Mr Niemöller.
After the defendants pleaded that this agreement constituted an
unenforceable pre-incorporation contract vis-a-vis the second
respondent, the appellant amended its particulars of claim to include
a number of alternative causes of action that are set out
below. The
respondents submit that when regard is had to the original cause of
action, based upon an agreement to pay commission
on 14 May 2007,
which was confirmed under oath, the alternative causes of action were
based upon expediency and not on the true
facts. The respondents
submit that this conclusion is supported by the absence of any
meaningful evidence, to support the causes
of action.
[32]
The
following questions arise regarding the various causes of action
relied upon by the appellant:
(a)
Whether Niemöller
was authorised to represent the purchasers at the meeting
on 14 May
2007 and agreed to the payment of commission to the appellant?
(b)
If Niemöller
possessed such authority, whether the agreement to pay commission
constituted an unenforceable pre-incorporation contract vis-a-vis the
second respondent?
(c)
Whether the joint venture between Niemcor Africa (Pty) Ltd (Niemcor)
and
Cronimet had been formed before the meeting on 14 May 2007 with
the result that Mr Niemöller represented the joint venture
at
this meeting, which was accordingly bound by Mr Niemöller’s
acceptance of the liability to pay commission to the
appellant?
(d)
If the joint venture
was bound to pay commission to the appellant whether it
was able to
avoid this obligation by adopting a company structure in the form of
the second respondent? If not, whether the second
respondent is bound
by the joint venture’s contractual obligations including the
obligation to pay commission to the appellant?
(e)
Whether Niemcor and Cronimet as members of the joint venture ratified
the act of Mr Niemöller in agreeing to pay commission to the
appellant?
(f)
Whether the joint venture passed the benefit of the purchase
agreement
to the second respondent which assumed the obligation to
pay commission to the appellant?
(g)
Whether the joint venture conferred a benefit upon the second
respondent
by way of a
stipulatio alteri
in the form of the
purchase of the mining venture that included the obligation to pay
commission to the appellant, which was accepted
by the second
respondent?
(h)
Whether the second respondent is estopped from denying the liability
for
payment of the appellant’s commission, because of
representations by the joint venture partners?
(i)
And finally whether the second respondent is estopped from denying
that Mr Herman Viljoen had authority to represent the second
respondent?
[33]
It
is quite clear on the evidence that Mr Niemöller was not
authorised to represent Cronimet at the meeting on 14 May 2007.
Ms
Novak’s evidence was that neither she nor her husband, Mr
Pariser, attended the meeting as representatives of Cronimet,
but
were there to gather information about the chrome mining operation
and to assess what was offered. This is consistent with
the function
of her company being to look for chrome mining opportunities
worldwide, on behalf of clients. Her evidence that Cronimet
did not
know she was at the meeting and no representatives of Cronimet were
present, is also consistent with this function of her
company. That
she would object to Mr Niemöller saying that Cronimet would buy
the mine at this initial meeting, is supported
by the lengthy
negotiations that followed, before the successful sale was concluded.
This evidence also refutes the submission
made by the appellant, that
because Ms Novak and Mr Pariser met with Mr Niemöller and Mr
Herman Viljoen before the meeting,
it can be inferred that a joint
venture between Mr Niemöller’s company, Niemcor, and
Cronimet was informally agreed
in principle. The only evidence led in
this regard by the appellant was Mr Maree’s that Mr Niemöller
had said that he
represented ‘die Duitsers’. This
evidence also refutes the appellant’s alternative submission
that Mr Niemöller,
Ms Novak and Mr Pariser had informally agreed
in principle at this stage to a joint venture between themselves.
There is accordingly
no basis for a finding that Mr Niemöller
represented a joint venture at this meeting, or that it was bound by
Mr Niemöller’s
acceptance of the liability to pay
commission.
[34]
The
conclusion that Mr Niemöller was not authorised to represent
Cronimet and that he could not have been at the meeting as
a
representative of a joint venture as none had been formed, renders it
unnecessary to consider whether any agreement to pay commission
by Mr
Niemöller, was an unenforceable pre-incorporation contract,
vis-a-vis the second respondent. In addition, whether any
joint
venture was able to avoid an obligation to pay commission by adopting
a company structure, does not have to be considered.
The most
probable conclusion on the evidence is that Mr Niemöller was
only representing his own company, Niemcor, at the meeting.
[35]
Whether
Niemcor and Cronimet as members of the subsequently formed joint
venture ratified the act of Mr Niemöller in agreeing
to pay
commission, is determined by the evidence of Mr Weiss and Mr Heil
that the first time Cronimet heard of the appellant’s
claim to
commission, was when the summons was received. In addition, Mr Weiss,
Cronimet’s attorney stated that Mr Bayle,
Niemcor’s
attorney, at no stage raised with him any undertakings made by Mr
Niemöller with regard to the payment of
estate agent’s
commission. Mr Weiss, Mr Heil and Ms Novak all stated that no mention
was made during an earlier meeting in
Dubai of any obligation to pay
commission to the appellant. It is therefore clear that Cronimet as
the other member of the joint
venture never ratified the conduct of
Mr Niemöller in agreeing to pay commission, because it was not
aware of this undertaking.
Therefore the joint venture could not have
ratified the conduct of Mr Niemöller.
[36]
Whether
any joint venture passed the benefit of the purchase agreement,
including the obligation to pay commission to the second
respondent,
is also determined by the fact that no joint venture had been formed
at the time of the meeting on 14 May 2007. That
Cronimet was never
aware of any undertaking made by Mr Niemöller to pay commission
to the appellant, means that the joint
venture between Cronimet and
Niemcor, could never have conferred any benefit upon the second
respondent, by way of a
stipulatio
alteri
.
[37]
I
turn to the issue of whether the second respondent is estopped from
denying the liability to pay commission, because of representations
made by the joint venture partners. In other words, whether the
second respondent is estopped from denying representations made
by Mr
Niemöller as to the liability to pay commission to the
appellant. It is trite that an estoppel can only operate against
the
person making the representation save where it is made through a duly
authorised agent,
[4]
or where
that person negligently enabled another person, acting fraudulently,
to make the representation to the person raising
the estoppel.
[5]
In this case, the representations were allegedly made by Mr Niemöller
on behalf of the joint venture and not of the second
respondent. This
would not justify an estoppel against the second respondent. In
addition, there is no evidence to show that the
second respondent
negligently allowed Mr Niemöller or the joint venture, acting
fraudulently to make such representations
to the appellant. There is
accordingly no basis for this submission.
[38]
The
remaining issue is whether the second respondent is estopped from
denying that Mr Herman Viljoen had the authority to represent
the
second respondent. It is alleged by the appellant that Mr Niemöller
and Mr Herman Viljoen represented to and misled the
appellant, that
they were authorised to represent the second respondent and to bind
the second respondent with regard to the second
respondent’s
liability to pay commission to the appellant. It is clear, however,
that a valid estoppel requires a representation
by the principal
regarding the agent’s authority. A representation of authority
by the agent is insufficient.
[6]
[39]
In
the result the appeal fails and the following order is made:
The
appeal is dismissed with costs including the costs of two counsel.
K G
B Swain
Judge
of Appeal
Appearances:
For the Appellant:
S J Bekker SC (with W J Bezuidenhout)
Instructed
by:
Van
Wyk Fouchee Inc
c/o
Louw Attorneys, Pretoria
Symington
& De Kok, Bloemfontein
For the
Respondent:
A Kemack SC (with E Eksteen)
Instructed
by:
Werksmans
Attorneys
c/o
Friedland Hart Solomon & Nicolson, Pretoria
Honey
Attorneys, Bloemfontein
[1]
The remaining
defendants do not participate in the present appeal and will only be
referred to where it is of relevance to the
issues in the appeal.
[2]
Cronimet Chrome
Mining SA v Brodsky Trading 224CC
(851/12)
[2013] ZASCA 155
(22 November 2013) paras 15 and 17.
[3]
Certificates,
1986, GN R1789,
GG
10403, 29 August 1986 (as amended).
[4]
Road Accident
Fund v Mothupi
2000 (4) SA 38
(SCA) para 29.
[5]
Stellenbosch
Farmers’ Winery Ltd v Vlachos t/a Liquor Den
2001 (3) SA 597 (SCA).
[6]
Glofinco v Absa
Bank t/a United Bank
2002
(6) SA 470
(SCA) paras 12 and 13.