Volvo (Southern Africa) (Pty) Ltd v Yssel (2009 (6) SA 531 (SCA) ; [2009] 4 All SA 497 (SCA) ; [2010] 2 BLLR 128 (SCA); (2009) 30 ILJ 2333 (SCA)) [2009] ZASCA 177; [2009] ZASCA 82 (20 August 2009)

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[2009] ZASCA 177
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Volvo (Southern Africa) (Pty) Ltd v Yssel (2009 (6) SA 531 (SCA) ; [2009] 4 All SA 497 (SCA) ; [2010] 2 BLLR 128 (SCA); (2009) 30 ILJ 2333 (SCA)) [2009] ZASCA 177; [2009] ZASCA 82 (20 August 2009)
THE
SUPREME COURT OF APPEAL
REPUBLIC
OF SOUTH AFRICA
JUDGMENT
Case No: 247/08
Reportable
VOLVO (SOUTHERN AFRICA) (PTY)
LTD
Appellant
and
GERT YSSEL Respondent
Neutral citation:
Volvo
v Yssel
(247/08)
[2009] ZASCA 82
(20 August 2009)
Coram: STREICHER ADP, NUGENT,
JAFTA, MAYA JJA & HURT AJA
Heard: 15 MAY 2009
Delivered:
20
AUGUST 2009
Summary: Fiduciary duty –
circumstances in which such a duty exists.
______________________________________________________________
_______
ORDER
_____________________________________________________________________
On appeal from: High Court
Johannesburg (Berger AJ sitting as court of first instance)
The appeal is upheld with costs
that include the costs occasioned by the employment of two counsel.
The order of the court below
is set aside and the following orders
are substituted:
‘
1. The respondent is ordered
to pay to the applicant the sum of R775 107 plus interest on
that amount at the rate of 15,5 per
cent per annum calculated from 12
September 2006 to date of payment.
2. The respondent is ordered to
pay the costs of the application, which are to include the costs
occasioned by the employment of
two counsel.’
_____________________________________________________________________
JUDGMENT
_____________________________________________________________________
NUGENT JA (STREICHER ADP, JAFTA,
MAYA JJA and HURT AJA
concurring)
[1] When it commenced operations
in 2000 Volvo (Southern Africa) (Pty) Ltd (the appellant) was looking
for a manager for its information
technology division. A personnel
placement agent introduced it to Mr Yssel (the respondent) and Volvo
decided to appoint him to
the position. Yssel did not want to enter
into direct employment with Volvo. He preferred instead to be
employed by a labour broker
with which he was then associated –
Highveld Personnel (Pty) Ltd
1
– which would assign him to provide his services to Volvo. Volvo
reluctantly accepted that arrangement and for the next five
years or
so Yssel worked for Volvo on that basis.
[2] In making the necessary
arrangements Volvo had no direct contact with Highveld and dealt
solely with Yssel who in turn dealt
with Highveld. The relationship
between Volvo and Highveld was regulated by sequential written
agreements, the detail of which
is not now important. The effect of
the agreements, essentially, was that upon receipt of monthly
invoices Volvo would pay Highveld
a fee for the services of Yssel,
and Highveld would in turn be responsible for remunerating Yssel. The
services that were to be
rendered by Yssel were described in the
various contracts as follows:
‘
The management of
the [Information Technology] infrastructure of [Volvo] by means of:
User Support
User Training
Investigation and
development of new [Information Technology] processes to stay abreast
with technology
Liaison with Volvo
information technology – Sweden
Staff management
Liaison with local
suppliers
Work in close
conjunction with line managers.’
[3] By 2004 there were six other
personnel in the information technology division. They were similarly
employed by labour brokers
who assigned their services to Volvo. Mr
van Rensburg, Mr van Rijswijk and Mr du Plessis were employed by a
labour broker known
as Optimising Systems. Mr Steyn and Mr Streak
were employed by Interg8 IT. Mr Coop was employed by ITSS.
[4] In about the middle of 2004
Yssel approached the Human Resources Manager of Volvo, Ms van Eeden,
and told her that some of the
personnel were unhappy with their
labour brokers and that he could arrange for all the personnel to
transfer to Highveld at no
extra cost to Volvo. Yssel suggested the
same to all the personnel concerned, pointing out that their
remuneration could be more
favourably structured if they were to
transfer to Highveld. Volvo and the personnel were agreeable, and
Yssel attended to making
the necessary arrangements.
[5] A written master agreement
(called a ‘temporary service agreement’) was concluded between
Volvo and Highveld to regulate
the new arrangement. It provided that
Highveld would supply the services of personnel to Volvo in return
for a monthly fee that
was to be stipulated in each case in an
annexure to the agreement (called a ‘confirmation of assignment’).
At various times
between August 2004 and April 2005 Yssel accompanied
each of the personnel to the offices of Highveld where they were
introduced
to Ms Pieterse (Manager: Marketing and Support) and each
signed a ‘confirmation of assignment’. They all said that they
were
given to understand that from the moneys received from Volvo in
respect of their services Highveld would retain a fixed charge of

about R425 per month and an administration fee of 3% of their
earnings. None was apparently pertinently aware of the rate at which

their services were being charged to Volvo.
[6] Volvo again had no direct
contact with Highveld in making these arrangements and dealt at all
times through Yssel who acted
as what he called a ‘facilitator’
or ‘intermediary’ between Volvo and Highveld. Once the new
arrangements were in place
Highveld would send invoices to Yssel each
month for the services of the various personnel and Yssel would
submit them for payment
to the relevant department of Volvo.
[7] Unbeknown to Volvo, and to
the personnel concerned, a large part of each monthly payment that
was being made by Volvo was ending
up in the pocket of Yssel. What
Yssel had not disclosed to Volvo, nor to the personnel concerned, was
that he had agreed with Pieterse
that he would be paid what he called
a ‘commission’ if he arranged for the personnel to transfer to
Highveld. He had also agreed
with her that the matter of the
commission should not be discussed with the personnel or with Volvo.
[8] The amounts that were
received by Yssel were substantial. In January 2006, for example,
Volvo paid R27 400 to Highveld
for the services of Van Rensburg,
from which Van Rensburg was paid R12 000 and the balance of
R15 400 went to Yssel.
In other cases his portion was somewhat
lower but overall he was receiving about 40 per cent of the moneys
that were being paid
to Highveld.
[9] All this came to light at the
end of 2005 when Steyn came across a document reflecting the
discrepancy between the amount that
was being paid by Volvo for his
services and the amount of his remuneration. Not satisfied with the
explanation for the discrepancy
that he received from Yssel he
investigated further and discovered other documents to similar
effect, whereupon he reported the
matter to senior personnel of
Volvo.
[10] The matter came to the
attention of Van Eeden in January 2006 and she arranged a meeting
with Pieterse. This was the first
time that Van Eeden had direct
dealings with anyone from Highveld. Before then all dealings between
Volvo and Highveld had taken
place through the ‘facilitation’ of
Yssel. When Pieterse was confronted with the discrepancies she at
first denied knowledge
of payments having been made to Yssel but
later acknowledged that such payments had been made. After the
meeting, as they left
the building, they encountered Yssel, who asked
Pieterse why she was at Volvo’s premises. Pieterse told him that
she could not
speak to him then but would do so at another time.
Later that day Van Eeden and another senior employee of Volvo were in
the process
of preparing a letter suspending Yssel when he delivered
a letter of resignation. The six personnel subsequently terminated
their
arrangements with Highveld and entered the direct employment of
Volvo.
[11] Investigations by an
internal auditor of Volvo revealed that from August 2004 to January
2006 Volvo paid R1 967 900
to Highveld for the services of
the personnel (excluding Yssel) of which they received R1 087 650.
From the balance of
R889 250 Highveld had deducted its own
commissions of R114 143 and the balance of R775 107 had
been paid to Yssel.
[12] Volvo sued Yssel in the High
Court at Johannesburg for payment of that amount, alleging that it
had been earned in breach of
a fiduciary duty that he owed to Volvo
to act in its interests and not in his own. The high court (Berger
AJ) dismissed the claim
and Volvo now appeals against that order with
the leave of that court.
[13] Over a century ago in
Robinson v Randfontein
Estates Gold Mining Co Ltd
2
Innes CJ expressed, in general terms, the legal principle that is
applicable in a case of this kind as follows:
‘
Where one man
stands to another in a position of confidence involving a duty to
protect the interests of that other, he is not allowed
to make a
secret profit at the other’s expense or place himself in a position
where his interests conflict with his duty. The
principle underlies
an extensive field of legal relationship. A guardian to his ward, a
solicitor to his client, an agent to his
principal, afford examples
of persons occupying such a position. As was pointed out in
The
Aberdeen Railway Company v Blaikie Bros.
(1 Macqueen 474), the doctrine is to be found in the civil law
(
Digest
18.1.
34.7), and must of necessity form part of every civilised system of
jurisprudence’.
[14] Moneys that are earned
secretly in breach of a duty of trust fall to be disgorged by the
fiduciary and there is little room
for him or her to avoid that
consequence. Recently in
Phillips
v Fieldstone Africa (Pty) Ltd
3
Heher JA summarised the position, as it has been articulated in
various decided cases, as follows:
‘
The rule is a
strict one which allows little room for exceptions … It extends not
only to actual conflicts of interest but also
to those which are a
real sensible possibility … The defences open to a fiduciary who
breaches his trust are very limited: only
the free consent of the
principal after full disclosure will suffice … Because the
fiduciary who acquires for himself is deemed
to have acquired for the
trust, … once proof of a breach of a fiduciary duty is adduced it
is of no relevance that (1) the trust
has suffered no loss or damage
… ; (2) the trust could not itself have made use of the
information, opportunity etc … or probably
would not have done so …
; (3) the trust, although it could have used the information,
opportunity etc has refused it or would
do so … ; (4) there is not
privity between the principal and the party with whom the agent or
servant is employed to contract
business and the money would not have
gone into the principal’s hands in the first instance … ; (5) it
was no part of the fiduciary’s
duty to obtain the benefit for the
trust … ; or (6) the fiduciary acted honestly and reasonably …
(although English and Australian
Courts make some allowance for
equity in calculating the scope of the disgorgement in such cases).
[15] There is no dispute that
Yssel received the sum of R775 107 in the circumstances that I
have referred to. He alleges,
however, that he did not stand in a
fiduciary relationship towards Volvo, and was thus entitled to
arrange for and earn the commission.
His central contention in that
regard – it is the recurrent refrain throughout his answering
affidavit – is that he had no
contractual privity with Volvo and
thus had no duties towards it at all.
[16] While certain relationships
have come to be clearly recognised as encompassing fiduciary duties
there is no closed list of
such relationships. As pointed out in
Randfontein Estates
,
4
and in numerous other cases in this country and abroad, whether a
particular relationship should be regarded in law as being one
of
trust will depend upon the facts of the particular case. Courts have
nonetheless often sought to identify features, or characteristics,

that impart fiduciary qualities to a relationship. In
Hodgkinson
v Simms
,
5
for example, La Forest J, writing for a majority of the Supreme Court
of Canada, said the following of ‘situations in which fiduciary

obligations, though not innate to a given relationship, arise as a
matter of fact out of the specific circumstances of that particular

relationship’:
‘
In these cases,
the question to ask is whether, given all the surrounding
circumstances, one party could reasonably have expected
that the
other party would act in the former’s best interests with respect
to the subject-matter at issue. Discretion, influence,
vulnerability
and trust were mentioned as non-exhaustive examples of evidential
factors to be considered in making this determination.
Thus, outside the
established categories, what is required is evidence of a mutual
understanding that one party has relinquished
its own self-interest
and agreed to act solely on behalf of the other party. This idea was
well-stated in the American case of
Dolton
v Capitol Federal Sav. and Loan Ass’n
,
642 p 2d 21 (Colo. App. 1982), at pp 23-24, in the
banker-customer context, to be a state of affairs
…
which impels or
induces one party “to relax the care and vigilance it would and
should have ordinarily exercised in dealing with
a stranger.” …
[and] … has been found to exist where there is a repose of trust by
the customer along with an acceptance
or invitation of such trust on
the part of the lending institution.’
[17] Features of the kind that
were mentioned in that extract – the discretion that one party may
have in relation to the affairs
of another, the influence that he or
she is capable of asserting, the vulnerability of one person to
another, the trust and reliance
that is placed in the other –
receive frequent mention in judgments on the subject of whether a
relationship was one of trust.
6
But such references do not seem to me to advance materially what was
stated in
Randfontein
Estates
and do little
more than to identify factors that were considered to be relevant to
the enquiry in the particular case. And while
the extract that I have
referred to might suggest that a ‘mutual understanding’ between
the parties concerned is a prerequisite
for such a relationship to
exist I think that would be to approach the matter too restrictively.
What is called for is an assessment,
upon a consideration of all the
facts, of whether reliance by one party upon the other was justified
in the circumstances. As pointed
out by Gibbs CJ in the High Court of
Australia in
Hospital
Products Limited v United States Surgical Corporation
:
7
‘
I doubt if it is
fruitful to attempt to make a general statement of the circumstances
in which a fiduciary relationship will be
found to exist. Fiduciary
relations are of different types, carrying different obligations …
and a test which might seem appropriate
to determine whether a
fiduciary relationship existed for one purpose might be quite
inappropriate for another purpose.’
[18] Contractual duties owed by
one party to another will no doubt often go a long way towards
defining whether the relationship
is one of trust but contractual
privity is not indispensable to such relationships, as correctly
observed by the court below. Having
said that, the court below went
on to find that Yssel indeed owed fiduciary duties to Volvo, but only
in relation to the exercise
of the specific functions that were
assigned to him in the various agreements between Volvo and Highveld
(the functions I have
listed in para 2 above). Because his functions
did not extend to the recruitment, employment or acquisition of
staff, so the court
reasoned, he was under no duty to act in the
interests of Volvo when he engaged in the activities with which we
are now concerned.
That seems to me to view the matter too narrowly.
[19] Yssel occupied the most
senior position in Volvo’s information technology division. That
there was no contractual privity
between him and Volvo seems to me to
be of little consequence. It was the position to which he was
appointed, rather than the nature
of the contractual relationship,
that defined what Volvo could expect of him. He had not been brought
in to its offices so as to
provide him with an opportunity to hawk
his own wares but had been brought there in the interests of Volvo.
That his functions
might not have included recruiting, employing and
acquiring staff does not seem to me to be material. No doubt he could
not be
compelled to accept instructions to engage himself in matters
of that nature. But the fact is that he did engage himself in
arranging
matters between Volvo and its staff. And in doing so he did
not purport to be doing so as a stranger who was conducting his own

affairs. He did so as an incident of his function as manager of the
division. Indeed, there can be no doubt that Yssel was well
aware
that it was precisely because he was the manager of the division that
Volvo could be induced to ‘relax the care and vigilance
it would
and should have ordinarily exercised in dealing with a stranger’.
8
[20] Yssel was well aware that
Van Eeden had made no independent enquiries relating to the
arrangement with Highveld and was acting
entirely upon what she was
told by him. That he found it necessary to secure an agreement of
secrecy from Pieterse makes it abundantly
clear that he was well
aware that Van Eeden believed that he was arranging matters pursuant
to his ordinary managerial duties and
not for his own account. In
short, he was well aware that Van Eeden did not consider herself to
be dealing at arm’s length with
an independent broker who was
arranging matters on his own account, but was dealing with the
manager of the division concerned.
It was only because Yssel was the
manager that the transaction came about at all. I have no doubt that
Yssel was in a position
of trust when he engaged himself in the
matter and was not entitled to allow his own interests to prevail
over those of Volvo.
He is obliged in those circumstances to disgorge
his secret commissions and the appeal must succeed.
[21] The appeal is upheld with
costs that include the costs occasioned by the employment of two
counsel. The order of the court
below is set aside and the following
orders are substituted:
‘
1. The respondent is ordered
to pay to the applicant the sum of R775 107 plus interest on
that amount at the rate of 15,5 per
cent per annum calculated from 12
September 2006 to date of payment.
2. The respondent is ordered to
pay the costs of the application, which are to include the costs
occasioned by the employment of
two counsel.’
_________________
R W NUGENT
JUDGE OF APPEAL
APPEARANCES:
For appellant: F G Barrie SC
G J Nel
Instructed by:
Bowman Gilfillan Inc,
Johannesburg
McIntyre & Van der Post,
Bloemfontein
For respondent: C J Nel
Instructed by:
Malherbe Rigg & Ranwell Inc,
Boksburg
Symington & De Kok,
Bloemfontein
1
Highveld Personnel (Pty) Ltd was later taken over by a Dutch company
and became known as Highveld PFS but I will refer to them

interchangeably as Highveld.
2
1921 AD 168
at pages 177-178.
3
2004 (3) SA 465
(SCA) para 31.
4
Page 180.
5
(1995) 117 DLR (4
th
) 161 at 176f – 177b.
6
See, for example,
Canadian Aero Service Ltd. v O’Malley
(1974) 10 DLR (3d) 371;
Pilmer v Duke Group Ltd (in liq)
[2001] HCA 31
;
(2001) 180 ALR 249
(HC of A);
Phillips v Fieldstone Africa (Pty)
Ltd
, above, esp 482C-D. See, too, J.R.M. Gautreau ‘Demystifying
the Fiduciary Mystique’
(1989) 68
Canadian Bar Review
1
and
the references cited.
7
[1984] HCA 64
;
(1984) 156 CLR 41
(HC of A) 69.
8
Dolton’s
case, quoted in
Hodgkinson v Simms,
above.