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[2016] ZAGPPHC 838
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Tri-Star Construction (Pty)Ltd v Spanish Ice Properties 21 (Pty)Ltd (26911/2010) [2016] ZAGPPHC 838 (27 July 2016)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: 26911/2010
In
the matter between:
TRI-STAR
CONSTRUCTION (PTY)
LTD
…......
Applicant/Plaintiff
and
SPANISH
ICE PROPERTIES 21 (PTY)
LTD
Respondent/Defendant
DATE
OF HEARING
...........
:
…......
24
MAY 2016
DATE
OF JUDGMENT
........
:
..........
27
JULY 2016
JUDGMENT
MANAMELA
AJ
INTRODUCTION
[1]
The applicant instituted an action for damages against the respondent
in 2010. The action was set down for trial, over two years
ago, on 29
January 2014. Towards the trial date, from around end of September
2013, the parties - through their attorneys - began
discussions for
possible settlement of the dispute between them. The settlement
discussions (or the outcome thereof) are the subject
matter of this
application. This Court is asked in terms of this application, in the
main, to determine whether or not settlement
was reached between the
parties during the discussions. The respondent opposes this
application, mainly on the basis that. the
person who participated in
the discussions did not have authority to conclude a settlement
agreement.
[2]
The opposed motion was argued before me on 24 May 2016 and I reserved
this judgment, after listening to oral submissions by
Mr AW
Pullinger, for the applicant, and Mr HF Oosthuizen SC, on behalf of
the respondent. The merits or demerits of the matter
can only be
determined from correspondences exchanged between the parties over a
period of about five months, from September 2013
to January 2014.
Therefore, narration of the issues by way of background to the matter
is warranted.
BRIEF
RELEVANT BACKGROUND (INCLUDING RELEVANT SUBMISSIONS BY THE PARTIES)
[3]
As indicated above, this part of the litigation between the parties
comes at the back of action proceedings. Although, the action
does
not have current significance, as indicated above, the action
proceedings had advanced to such a stage that the matter was
already
set down for trial. The narration below explains what became of the
matter and the ensuing trial.
[4]
On 02 October 2013, Mr Kevin Hacker (Hacker) of the applicant's
attorneys sent electronic mail (e-mail) to his counterpart,
Mr Ivan
Gurovich (Gurovich), the material part of which reads:
"2.
I confirm my request to you to furnish me with your client's contact
information (for provision to our client) to facilitate
without
prejudice discussions
between
our clients
directly, so as to curb further legal costs as we now step up
preparation for trial."
[1]
[underlining
added for emphasis]
[5]
I consider it necessary to hasten pointing out that, the applicant
says the above was a "request
to
Gurovich
to
furnish him
[i.e.
Hacker]
with
the
respondent's
contact
information
to
be provided
to the applicant so as to facilitate settlement discussions directly
between the litigants and curb further legal costs."
[2]
This is admitted by the respondent,
[3]
albeit for different reasons. Therefore, this is common cause between
the parties.
[6]
On 25 October 2013, the respondent's attomeys
[4]
addressed a
letter to their counterparts, which included the
following:
"We
confirm that we have received information from our client, confirming
that we may provide the contact details of
the
relevant
person
at our client which your
client
may
contact should it wish to make an y settlement
proposals directly to our client.
The
relevant contact details are Mr Peet Erasmus with email address ...
and cell phone number.
.."
[5]
[underlining
added for emphasis]
[7]
On 09 December 2013, Erasmus sent an e-mail to Mr Derek Wheals
(Wheals) of the applicant, whilst copying Mr Lawrence Bird of
the
respondent on the email, in which he, among others, said the
following:
".
..we would without prejud ice and without acceptance of any
indebtedness or liability, be prepared to offer a settlement
in the
amount of R500k in full and final settlement of the matter.
We
will be prepared to commence payment of settlement if accepted, in
April of 2014, at a rate of R5Ok per month.
This
is our stance at present, and we will await your response to the
offer
to
finalise p
aperwork."
[6]
[underlining
added for emphasis]
[8]
On 10 December 2013 Hacker sent an e-mail [annexure "FA9"]
to Gurovich in which he apparently recorded what was discussed
in the
afternoon before. He also stated that he is confirming that
settlement has been reached in the matter as follows:
"a.
Your cl ient will effect payment of a total settlement consideration
to our client in the sum of R550 000,00 in full and
final settlement
of the matter, payable as follows:
i.
Payment in the amount of R20 000,00 (which you are presently holding
in trust) will
be
released to our client forthwith and on signature of the written
settlement agreement;
ii.
Seven monthly instalments in the sum of R 70 000,00 per month will be
paid to our client on the first day of each and every
succeeding
month from 1 April 2014 until I October 2014 inclusive;
iii.
Payment of the last instalment of R40 000,00 will be made on I
November 2014;
b.
The said settlement agreement will contain the following provisions:
i.
An acceleration clause in there [sic] event of your client failing to
pay any one instalment on the due date, subject to your
client being
afforded notice of 7 calendar days to remedy a breach, but provided
further that should your client breach on three
or more occasions
your client shall not be entitled to any further notices;
ii.
The agreement will be made an order of court on 29 January 2014 or
sooner should our cl ient so req uire;
iii.
In addition to the invocation of the acceleration clause following
breach and due
notice,
the following penalties apply:
1.
Your client shal l be liable for interest on the said outstanding
settlement consideration at the rate of 15,5% per annum from
I
January 2012 until payment;
2.Your
client shall be liable for our client's legal costs in enforcing its
rights in terms of the settlement on the scale of attorney
and own
client.
2.
The
written settlement agreement embodying the above will follow as
a
greed."
[7]
[underlining
added for emphasis]
[9]
According to the applicant what is stated above (from annexure "FA9")
confirms existence of an agreement reached
between the
parties. It is
said
that during
a
telephone
conversation
between Hacker and Gurovich something called "gentlemen's
agreement between two colleagues" was reached to
be followed by
a written agreement.
[8]
However,
the respondent
denies
that
"a
binding
settlement
agreement"
was
concluded.
The
respondent
says
that
"FA9" envisaged that a binding agreement would only ensue
when a written agreement had been signed on behalf of both
parties.
[9]
Gurovich was not authorised
to conclude an agreement as contained in annexure "FA9", it
is contended by the respondent.
Gurovich did not
respond
to "FA9",
but
had
something
to
say
about
all
these
a
little
later.
[10]
[10]
On 18 December 2013 a draft agreement
[11]
was sent by Hacker to Gurovich. The applicant says
that
this
was
after
Gurovich
had stated
during
a
telephone
conversation
with
Hacker
that
his
client
was
happy
and
did
not
have
problems
in the
contents
of "FA9"
forming
the
contents of the agreement between the parties. This is denied by the
respondent.
The
respondent contends that the second paragraph of an e-mail
accompanying the draft settlement agreement
[i.e.
annexure
"FA12"]
clearly
stated that
any
settlement
agreement
reached
between the parties, had to be in writing and signed.
[12]
This is referred to as the "antecedent
agreement"
and
it
is dealt
with
a
little
later
below.
[13]
[11]
Further correspondences followed regarding the signing or
finalisation of the settlement agreement. On 09 January 2014 Erasmus
sent to Hacker an amended
draft
agreement with tracked changes.
[14]
At this stage the respondent appears to have been communicating with
the applicant from two fronts, through Gurovich on the one
front and
Erasmus on the other. Hacker advised Erasmus that the proposed
changes, but two,
were
acceptable. The two unacceptable proposed changes had to do with the
reduction of the proposed settlement instalments from
R70 000 per
month to R50 000 per month (in
clause
4.1.2)
[15]
and for the
agreement to be made an order of Court (in clause 6.2).
[16]
Gurovich and his firm withdrew the next day, on 10 January 2014, as
attorneys of record for the
respondent.
[12]
After Gurovich's withdrawal, Hacker continued the interactions with
Erasmus directly. Erasmus advised Hacker by e-mail on 14
January 2014
that Hacker should accept the "acceptable" tracked changes.
This I understand to mean that Hacker was to
reject those changes he
had indicated as unacceptable. His e-mail ["FA24"] reads in
the material part:
"HI
KEVIN
PLS
ACCEPT
TRACK
[sic]
CHANGES
IN
PARA
3.1,
4.1.1
AN
D
9.1.2 AN
D
RETURN FOR
SIGNATU
RE
ASAP."
[17]
[13]
According to the applicant what is quoted above from annexure "FA24"
and a conversation Hacker had with Erasmus on
14 January 2014 confirm
the existence of an agreement between parties. Erasmus is said to
have agreed during the conversation that
the agreement could be made
an order of Court. But on 15 January 2014 Erasmus sent another e-mail
to Hacker and said:
"Hi
Kevin let me be forthright. I sat with Laurence and the accountant
yesterday and discussed the matter at length.
The
offer made to Derek ie R50k pm is simply the best we are prepared to
do at date [sic].
There is no sense in committing to something
else, thus the original offer and mandate to Ivan. He was never
mandated to negotiate
a 30% increase in the monthly
offer
we put f
orth.
I
need to you [sic] put it to Derek, and revert.
Apologies
for
the
run around."
[18]
[underlining
added for emphasis]
[14]
Hacker labelled the above e-mail (i.e."FA28") a "sudden
about-tum" and retorted
that same
would not be countenanced. Hacker accused Erasmus of "backtracking"
or "reneging from the agreement",
which he obviously
considered unacceptable.
[19]
The
accusations appear to have had some sort of effect, as Erasmus
thereafter e-mailed Hacker on 15 January 2015 and said
"we
will agree to a monthly payment of R70k p/m, but must beg your
indulgence to have this then commence a month later ie.
1 May 2014.
This is purely a
cashflow
exercise."
[20]
[15]
However, the applicant wasn't prepared to grant the one month's
grace, but insisted that the agreement is to be made an order
of
Court. With that the parties advised each other that counsel will be
briefed for the ensuing trial.
[21]
But, as indicated above, the trial did
not proceed
and eventually this application was launched.
ISSUES
IN THE DISPUTE
General
[16]
As already stated above, the applicant's case is that there was
settlement as
contained
in a draft attached to its papers.
[22]
This Court, in the main, is asked to declare the damages action
settled on the terms of the draft. The other prayers are for
ancillary
or consequential relief. They include prayers for
declaration of the settlement agreement binding on the respondent;
declaration
that
the
respondent
is
in breach
of the
terms
of
settlement
agreement,
and for the
respondent to be ordered to remedy the breach within 7 days. Should
the respondent
fail to
remedy
the
breach
as
ordered, the
applicant
wants
to be
authorised
to return
to the
Court for a monetary judgment.
[23]
[17]
As stated above, Mr AW Pullinger appeared for the applicant. His
submissions were significantly under the segments: declaratory
relief; contractual authority of Mr Erasmus and the antecedent
agreement. I liberally adopt the aforesaid headings for purposes
of
discussions below, but I think there will be interlinks between the
topics or headings and even some additions thereto.
Declaratory
nature of the relief
[18]
As indicated above, the relief sought by the applicant in this
application, is of a declaratory nature.
[24]
In the main, the applicant seeks a declaration by this Court that a
binding settlement agreement was reached in respect of the
action
lawsuit between the parties. The respondent disputed that the
applicant qualifies for a declarator but, at the hearing
of this
application,
Mr
Oosthuizen
SC,
appearing
for the
respondent,
advised
that
the
respondent
does not persist in this argument and therefore there is no need to
rule on the issue. This is mentioned here simply
for completeness.
Next are the issues requiring determination by this Court.
Authority
of Mr Erasmus to conclude an agreement
[19]
Mr Pullinger submitted that an agreement between the parties was
reached on
14
January
2014,
when
Erasmus
requested
Hacker
to
accept
the
proposed
changes
to
the
draft
agreement.
[25]
The
respondent's
main
contention
is that
no
settlement
could
have
been
reached
as
Erasmus did
not
have
the
necessary
authority
to
conclude
an
agreement
or
to
settle
the
matter.
[20]
The following, in my view, are the critical submissions by the
applicant. Erasmus had authority as Mr Laurence Bird (Bird),
the only
director of the respondent, spoke through
the mouth
of
Erasmus.
[26]
Erasmus's
designation
or
identification as
the contact
person would
have come
from Bird. Erasmus was Bird's mouthpiece. Bird appointed Erasmus to
compromise the claim with applicant. Although Bird
was to sign the
agreement,
the
agreement was reached with Erasmus. Not only did Bird not sign the
agreement, but he
did not
give an explanation why he did not do so. This is indicative of a
party who negotiated in bad faith. Something ought to
be made of the
respondent's constant referral to the absence
of "binding
agreement" as opposed to just
agreement.
[21]
The respondent denies that Erasmus had authority to conclude an
agreement with
the
applicant.
Regarding
the
contention
that
Erasmus
was
the
mouthpiece
of Bird,
Mr
Oosthuizen
argued
on
behalf of
the
respondent
that,
on
the
face
of
the
founding
affidavit,
the
party or
person
who
represented
the
respondent
is Erasmus.
Nowhere
is Bird's
name
mentioned.
And
this
is
clearly
denied
in
the
opposing
affidavit,
wherein
the
argument
is
made
that
Erasmus
"was
merely the messenger who was requested by me [i.e. Bird] to hear what
settlement proposals the applicant may have, to
inform me [Bird]
thereof and to provide the applicant with feedback on my [Bird's]
response to such proposals."
[27]
Therefore, Erasmus was a messenger and not a representative.
[28]
[22]
Mr Oosthuizen further submitted that on the basis of the
Plascon-Evans
[29]
rule
[30]
it has to be accepted
that Erasmus was appointed a mere messenger. He submitted that, what
is
reflected in
annexures
"FA24"
[31]
and
"FA28"
[32]
do
not
indicate
a
person
who
calls
the
shots,
so to
speak. Further that, when a messenger does not comply with the
instructions, the handler [my words] is not bound. Therefore,
the
applicant has to show that Erasmus acted in terms of his
insttructions as a manager.
[23]
On why the settlement agreement was not signed, Mr Oosthuizen had a
very simple answer: because the parties were not
ad
idem.
[33]
He added that there is no merit in the submission that the respondent
negotiated in bad faith, as what is referred to as the point
at which
agreement was reached on 14 January 2014 was corrected on the same
date
and
communicated to the applicant by Erasmus the next day on 15 January
2014.
[34]
Also, the fact that
there were no further attempts to reach settlement indicates that no
agreement was reached with
Erasmus.
Ostensible
authority/ Estoppel
[24]
It is also submitted, more fitting as alternative argument, that
Erasmus had
ostensible
authority to conclude the agreement. It is said that Bird never
disavowed the conduct of Erasmus, until only later. Mr
Pullinger
asked the question, perhaps rhetorically, how
the
appointment and involvement of Erasmus in the matter looked to a
party on the other side. The
respondent's
view
is
that
the
applicant
did
not
meet
all
the
requirements
for
estoppel
to
succeed in
this regard.
[35]
Further, the
fact that Bird had to be copied on all e-mails is indicative of the
lack of authority on the part of Erasmus. There
is no proof that Bird
approved the agreement in that Erasmus was
authorised.
[25]
On misrepresentation (as one of the requirements for raising
estoppel)
the following are the submissions on behalf of the
respondent. There was no misrepresentation as Bird on 15 January 2014
directed
Erasmus to immediately go back and communicate the correct
position, m as far as the respondent was concerned. There was no duty
on Bird to say something, the submissions continue. There was simply
no representation by Bird or indication that the applicant
relied on
such representation. If there was such reliance, same would not be
reasonable.
[26]
Further, there was no prejudice at the time of the alleged
representation, it 1s submitted for the respondent. What is alleged
to be prejudice was only that two years later the matter had not
proceeded to trial. Prejudice has to manifest itself through
patrimonial loss. Besides, the applicant could have proceeded with
the trial, as it actually threatened to do. Therefore, reliance
on
estoppel
is not established, it is submitted.
Antecedent
agreement
[27]
The
respondent
raised,
as a
defence, the
so-called
antecedent
agreement.
This
is in the
event
that
this
Court
is to
find
that
Erasmus
had
authority
to
settle
and
therefore
a
settlement
agreement
was been reached, then the respondent's
defence is
that the
parties
had agreed
through
their
attorneys
that
the
matter
would
only
become
settled
if the
settlement
agreement
was
reduced
to
writing
and
signed
by
the
parties.
This
was
always
an
agreement
between
the
parties, it
is contended by the respondent. Gurovich returned from his retirement
from
the
matter, so to speak, to forward an e-mail to Hacker on 20 January
2014 in this regard.
[36]
He
also deposed to a confirmatory affidavit to that effect.
[37]
[28]
The applicant denies existence of the antecedent agreement. It adds,
for good measure I suppose, that if ever there was an
agreement
reached between Gurovich and Hacker this expired when Gurovich's firm
withdrew as attorneys of record. I have to immediately
say this
cannot be correct. Gurovich was an authorised attorney of record
until the last day of his mandate and everything done
by him whilst
executing his client's mandate remains valid until set aside on good
cause. Besides, there is no evidence suggesting
that he was removed
from the matter due to any misconduct on his or his firm's part or
disagreement with client.
[29]
The applicant argues that the respondent has failed to establish the
antecedent agreement
in
its
answering
papers. The
applicant
contends
that
not
all the
elements
to
prove
conclusion
of the antecedent agreement has been proven in the answering
affidavit. The absence of these allegations from the answering
affidavit is fatal to the application, it is contended.
[38]
It is trite or even common cause that the onus of establishing the
so-called "antecedent agreement" is on the
respondent.
[30]
Mr Oosthuizen pointed out that, the antecedent agreement is not
located in
annexure
"LB2"
[39]
to the
answering
affidavit,
but
confirmed
thereby.
On the
basis
of
the
Plascon-Evans
rule,
the
respondent's
version has
to be
accepted that there was an
antecedent
agreement.
There is
further no need for the antecedent agreement to be in writing.
[40]
The Court can also infer from the conduct of the parties the
existence of an agreement in this regard
[41]
and Gurovich confirmed this in his confirmatory affidavit. The
applicant was well aware of
this
defence before launching this application.
[42]
The application is the abuse of process of the Court.
[31]
I proceed to an analysis of the issues above against applicable legal
principles. In the meantime, I bemoan the fact, all of
the above is
clearly indicative of the existence of a dispute of fact in this
matter. This much was known to the applicant long
before it issued
its application in July 2014.
APPLICATION
OF LEGAL PRINCIPLES TO THE FACTS
[32]
Here is a recap of the material facts stated above, as I see them.
With the date of trial looming in September 2013, the parties
through
their attorneys began discussing possible amicable settlement of the
dispute. A little later in October 2013, the applicant's
attorneys
asked their counterparts for details of a person designated by the
respondent for direct contact by the applicant to
pursue the
discussions. This, in the applicant's view, would have facilitated
settlement of the matter without incurring legal
costs. The
respondent designated Erasmus. It is not clear as to who was
nominated from the applicant's side as applicant's attorneys
remained
on record even after respondent's attorneys had exited the scene.
Erasmus engaged with Hacker both telephonically and
through
electronic mail (e-mail). Their subsequent interactions, and to some
extent the prior engagements between Hacker and Gurovich
(the latter
as erstwhile attorney for the respondent) would be critical for a
determination to be made here.
[33]
Without much ado, I say that at face value the terms of the agreement
appear to have been
settled
on
14 January
2014
when
Erasmus
and
Hacker
spoke
about
the
tracked
changes
to
the
draft
that
were
to
be
accepted.
[43]
But
this
is
halted in
the
tracks, so
to
speak,
by
the denial
of
authority
of
Erasmus
to bind
the
respondent.
It
is my
view
that,
from the
documents
it
is clear
that
any
agreement
reached
was
to
be
signed
by
someone
other than
Erasmus.
Also
the reason
why Erasmus was brought into the matter is of vital importance.
Therefore, it is necessary
to
deal with
the
issue
of
authority
of
Erasmus
or
lack
thereof
in
order
to
answer
the
question
whether or not settlement was reached between the parties.
Authority
to conclude an agreement
[34]
The respondent says Erasmus did not have authority to conclude any
agreement, but that only Mr Laurence Stephen Bird (Bird),
as the sole
director of the respondent, had such authority. Erasmus was merely a
messenger only authorised to hear what offers
were being made, relay
these to Bird and revert to the applicant with Bird's response. I
will deal with this issue against the
background of principles of
company law, as well as, the law of agency.
[35]
In
Tuckers
Land and Development Corporation v Perpellief
[44]
Nestadt
J (as he then was) dealt with the issue of authority in companies as
follows. In terms of both common law and statute, companies
act
through natural persons under its authority.
[45]
This authority may be in express, implied or ostensible
forms.
[46]
Express authority
may be derived from the articles of association
[47]
or resolution of the company. The latter may be at the level of board
of directors or shareholders. Implied authority exists when
an
official of a company who usually has the particular authority act as
if he or she indeed has authority when this is not
the
case.
[48]
Ostensible authority
may be proven by successfully raising
estoppel
from
the particular facts of the matter.
[36]
When contracting with a company, one would encounter, on the one
hand, the
board of
directors and managing director or chairman of the board of
directors, and branch manager or secretary, on the other.
[49]
The first group would entitle a person contracting with the
company through either of those persons to assume that they have
authority.
[50]
However, when
contracting with the latter group a third party would not be entitled
to automatically assume that they have authority
and the company
would not be disentitled from
denying
authority.
[37]
However,
the
parties
herein
do
not
agree
as to
the
designation
of Erasmus
in relation
to the respondent. According to the applicant he is
"the financial and legal manager of the respondent",
[51]
which is obviously denied by the respondent.
[52]
It is however common
cause that
Erasmus is the financial and legal manager of Kusile Group of
Companies, which may or may
not
include
the
respondent.
[53]
In
my
view,
it
doesn't
really
make
any
difference
to which
entity
Erasmus belongs. Financial and/or legal managers do not automatically
or by virtue
of their
position have authority to conclude
agreements on behalf of their
companies.
[54]
Although,
I hesitate to follow this appellation, Erasmus was merely a
messenger.
[55]
This
much is
borne by the reason or purpose for which he was brought onto the
scene. The applicant wanted to communicate directly with
the
respondent and not through the medium of attorneys. Erasmus was
brought in for this purpose. He became the contact person of
the
respondent for purposes of making settlement proposals to the
respondent.
[56]
In my view he
merely replaced the attorneys. Just like the attorneys, Erasmus was
required to act and participate in the settlement
discussions in
terms of the respondent's instructions. This is not
to say he
could not conclude an agreement, but the ultimate authority to
conclude an agreement
would
have
come from
the
respondent.
Of
course
he
may have
embellished his
role,
which
is not my
finding,
but
the moment
the
respondent
denies his
authority,
it becomes
a different
matter altogether. But, in my view, the applicant was always aware
that the person that was to sign the agreement is
Bird and not
Erasmus.
[57]
After all
Erasmus was there
to pursue
the so-called "without prejudice" discussions on behalf of
Bird or the respondent.
[58]
[38]
I do not agree that Bird had a duty to speak or to get involved when
he was copied on the e-mails. I do not make much about
his silence,
but I will deal with this further later on under the subheading
estoppel.
Suffice for now to state that, I find that there was
no actual authority, whether express or implied, given to Erasmus by
Bird as
the sole director or the respondent.
Ostensible
authority
[39]
In the absence actual authority, be it in its express or implied
form, I then move to deal
with
ostensible
authority.
This in our
law is
dealt with
under
the
principles
of
estoppel.
[59]
The
requirements for
estoppel
[60]
are
well-known
and I would avoid lengthening this
judgment
with a repeat of
same.
[40]
As indicated above, the applicant contends that the fact that Bird
was copied on all correspondences and did not speak, when
according
to the applicant he had a duty to speak if he did not agree, should
be presumed that he had assented. I have already
disagreed with
this
contention. Erasmus was brought onto the scene to be the contact
person for the respondent
in the
"without
prejudice"
settlement
discussions
when
the
parties
decided
to
negotiate
directly
to avoid
legal costs inherent in the involvement of attorneys. This was his
role from
the
beginning and I am not aware of anything to the effect that the
respondent changed this
role. Other
than his
silence,
I am
not
aware
of anything
Bird
did
or didn't
do, that
could
be
argued to
have misrepresented Erasmus's authority. For
estoppel
would
not avail the applicant, unless it is shown that Bird or the
respondent and not Erasmus himself made the
alleged
representation.
[61]
Any reliance by the
applicant would not be reasonable, as the
applicant,
among others, appears to have known the designation or position, even
if incorrectly so,
of Erasmus
within the respondent or the Kusile Group of Companies as the
financial and legal manager.
[62]
[41]
The respondent argued that even if other elements of
estoppel
were
met, the application should be unsuccessful on the ground that the
applicant has shown no prejudice. Absent settlement the
applicant was
entitled to enrol the action for a trial. Further, prejudice suffered
has to be of a patrimonial nature
[63]
and the action may be enrolled for trial, should the applicant be so
minded or advised. I
agree.
[42]
Further, the applicant places heavy reliance on the silence of Bird.
It terms this to
be
"acquiescence" and cites
dictum
from
the decision of Miller JA in
McWilliams
v First Consolidated Holdings
[64]
in which the learned judge of appeal, among others,
said
".
.. a
party's
failure to
reply to a letter asserting the existence of an obligation
owed by
such party
to the
writer
does
not
always
justify
an
inference
that
the
assertion
was
accepted
as the
truth.
But
in general,
when according to ordinary commercial practice and human expectation
firm repudiation of such an assertion would be
the norm if it was not
accepted as correct, such party's silence and
inaction,
unless satisfactorily explained, may be taken to constitute an
admission by him of the truth of
the
assertion ...
[65]
But,
in my view, proper context is required to the above quoted words. In
Mc Williams v First
Consolidated Holdings
a
letter was sent by an attorney acting for the respondent, who later
passed away, and received by the appellant. Attached to the
letter
was an unsigned memorandum which the sender attorney stated that it
reflected the terms agreed upon by the parties for the
purchase of
shares by the appellant. The appellant never responded to the letter.
This is obviously the opposite of what happened
in this matter.
Herein the respondent responded to all correspondences including on
15 January 2014 when the parties appeared to
have deadlocked. So
there was never a reasonable opportunity for the appellant to
conclude that there was acquiescence by the respondent.
Therefore, I
do not agree with the applicant submission that this is a classical
case where the party should be
estopped
from denying authority
of its agent.
Messenger
vis-a-vis agent
[43]
In the seminal work on
Agency
and Representation
[66]
,
agency
is said to denote
many
branches of law, but its meanings include "an agreement in terms
of which one person, called
the
agent,
performs
some
task
for
another
person,
called
the
principal,
in
connection
with
a
juristic
act by or for the principal". In the same work an agent or
representative is
contrasted
with a messenger and the following is what I consider relevant in
this
regard:
"The
representative or agent concludes a juristic act on behalf of another
person by an expression of his or her own will.
The messenger, on the
other hand, merely conveys the words of one person to another person.
The juristic act is concluded by the
person whose words he or she
conveys. It has been suggested that the essential difference between
the agent and the
messenger
is that the
former
exercises
discretion
to a
greater
or
lesser
degree,
whereas the
latter does not. It is true that a messenger merely transmits the
statement of one person to another person, but that
does not mean
that a person whose powers are circumscribed to
such an
extent that he or she has no scope to determine the terms of a
contract or other juristic act is necessarily
a messenger
and
not
an agent.
The
crucial point is whether he or she acts in the name of another
person.''
[67]
[quoted
without references, but with added underlining for emphasis]
[44]
As indicated above, Erasmus was brought into the matter to be the
contact person for the respondent in the settlement discussions.
He
was appointed by Bird or the respondent to participate in the
discussions in the name of the respondent or Bird, its director
or
both. The discussions were without prejudice to the rights of the
parties. I agree that Erasmus was a messenger. It may well
be that
Erasmus exceeded his capacity as messenger, which is not my finding,
but clearly that would be another issue, possibly
capable of a
decision elsewhere.
Antecedent
agreement
[45]
I have already found that there was no settlement of the action.
Therefore, there is no need for determining the issue relating
to the
antecedent agreement.
CONCLUSION
AND COSTS
[45]
From my conclusions or findings above, it is clear that this
application ought to be dismissed. But there is something else
I
would like to add. The events premising this application spanned over
a period of almost five months. They included what was
said on the
telephone or electronic mail by representatives or persons acting on
behalf of the parties. There were allegations,
counter-allegations
and denials long before the application was issued. It was clear that
there is dispute of facts and, in my
view, motion proceedings were
inherently bound to pose challenges for determination of the issues
by the Court. There was merit
in the dispute of authority. I am
mentioning this under the heading of costs because it is relevant
here, even though the matter
is disposed of for different reasons. In
my view, it is only that the applicant doesn't appear to have been
motivated by bad motives
and was
bona fide
in its pursuit of
the relief sought and denied, that I will not contemplate a punitive
costs order. Also, the respondent settled
for a normal costs order,
which would be awarded with the inclusion of costs of senior counsel.
ORDER
[46]
In the premises. I make the following order:
1
.The application is dismissed;
2.
Applicant is liable to the respondent for costs of the application
party on party and party scale
_______________
K.
La M. Manamela
Acting
Judge of the High
Court 27 July
2016
Appearances
For
the Applicant
..............
:
.............
Adv
AW Pullinger
Instructed
by
....................
:
.............
Fairbridges
Wertheim Becker Inc, Johannesburg
…
...................................................
c/o
Adams and Adams, Pretoria
For
the Respondent
.........
:
............
Mr
HF Oosthuizen SC
Instructed
by
...................
:
..............
Krligel
Heinsen Inc
…
....................................................
c/o
Martin Terblanche Attorneys, Pretoria
[1]
See annexure "FA I " on indexed p 34.
[2]
See par I O on indexed p 15.
[3]
See par 13 on indexed p I 08.
[4]
There was a change of attorneys on the side of the respondent and
therefore references to respondent's attorneys will be to those
attorneys that were retained at the material time. The first
attorneys withdrew on I 0 January 2014. See par 1 1 below.
[5]
See annexure •'LB J " on indexed p 127.
[6]
See annexure •'FA7" on indexed p 40.
[7]
See annexure "FA9" on indexed p 42.
[8]
See par 21 on indexed p 20.
[9]
See pars 19 and 20 on indexed pp 1 10-1 1 1.
[10]
' See par 27 below.
[11]
See annexure "FA 12.1-8" on indexed pp 46-53.
[12]
See annexure '"FA 12'' on indexed p 45.
[13]
See pars 27-30 below.
[14]
See annexures "'FA20" and "FA20. l -8" on
indexed pp 61-69.
[15]
See indexed pp 65 and 70.
[16]
See indexed pp 67 and 70.
[17]
See annexure 'FA24 on indexed p 75.
[18]
See annexure "FA 28" on indexed p 79.
[19]
See annexure "FA 29" on indexed pp 80-81 .
[20]
See annexure "'FA30" on indexed p 90.
[21]
21 See annexures "FA32" on p 92 and "FA 33" on p
93.
[22]
See annexure 'A" on indexed pp 5-12.
[23]
See notice of motion on indexed pp 1-4
[24]
See pars 1 and 16 above.
[25]
See pars 12 and 13 above
[26]
This is the case made out only in the repying affidavit. See par 9
on indexed pp 138 -143
[27]
See par 4.3 on indexed p I 04.
[28]
See Saambou Nationale Bouvereniging v Friedman
1979 (3)
SA 978
(A) at 989 F-H.
[29]
Plascon-Evans Paints ltd v Van Riebeeck Paints (Pty) ltd
1984 (3) SA 623 (A).
[30]
The Plascon-Evans rule deals with disputes of fact in motion
proceedings. See Plascon-Evans at 634H-6358
[31]
instructions as a messenger.
See
indexed p 75.
[32]
See indexed p 79.
[33]
Defined as "'eensgesind; eenstemmig; van eenderse sienwyse II
of one mind; unanimous; (to be) agreed (as to)." in Hiemstra
V.G. and Gonnin H.L. Trilingual Legal Dictionary 2nd ed (Juta and Co
Cape Town 1986).
[34]
See pars 12 and 13 above.
[35]
See pars 14 and 15 of the respondent's heads of argument pp 8-9.
[36]
See annexure ''LB2" on indexed pp 128-129.
[37]
See annexure ''LB3" on indexed pp 130-131.
[38]
See Wightman t/a JW Construction v Headfour (Pty) ltd and Another
[2008] ZASCA 6
;
2008 (3) SA 371
(SCA) at pars 12, 13 and 15.
[39]
See indexed par 27 and footnote 36 thereto above. See further
annexure "LB2" on indexed pp 128-129 ..
[40]
See pars 3 1 and 36 of the respondent's head of argument.
[41]
See further p 42, "FA9", p 20 and the decision of Bailess
v Highveld 7 Properties (Pty) ltd and Others
1998 (4) SA 42
(N) at
501-511.
[42]
See par 4.4 on indexed p I 05.
[43]
See par 12 above.
[44]
1978 (2) SA 1
1 (T).
[45]
See Tuckers Land and Development Corporation at 14C. The learned
judge stated that section 69 of the repealed Companies Act 61
of
1973 was a •'statutory enforcement" of the common law
principle. Section 69 read as follows: "(]) Contracts
on behalf
of a company may be made as follows:- (a) Any contract which if made
between individual persons would by law be required
to be in writing
signed by the parties to be charged therewith may be made on behalf
of the company in writing signed by any
person acting under its
authority, expressed or implied, and may in the same manner be
varied or discharged; (b) any contract
which if made between
individual persons would by law be valid though
made orally only and
not reduced to writing, may be made
orally on behalf of the company by any person acting under its
authority, expressed
or implied, and may in the same
manner be varied or discharged.
(2)
All contracts made in accordance with this section shall be
effectual in law and shall bind the company and its successors
and
all other parties thereto." The equivalent of section
69 of the repealed Companies Act
61 of 1973 in the
new
Companies Act 71 of 2008
will, in my view, be
section 20
, read
with
section 66.
See generally chapter 5 of Delport P The New
Companies Act Manua/2
°d ed (LexisNexis
SA 201 1) on pp 63-69.
[46]
46 See generally NBS Bank Ltd v
Cape Produce Co (Pty) Ltd and
Others
2002 (I ) SA 396 SCA in which the
Court
quoted from the English case of Hely-Hutchinson v Brayhead Ltd and
Another [1968] I QB 549 (CA) at 583A-G ([1967] 3 All
ER 98 at
102A-E).
[47]
4Now the Memorandum of Incorporation together with
memorandum of association. See ...of
Companies Act
71
of 2008
.
[48]
48 See Wolpert v Uitzigt Properties (Pty) Ltd
and Others
1961 (2) SA 257
(W) at 266.
[49]
See Tuckers land and Development Corporation
at 15A-B.
[50]
I will not deal with the Turquand rule (derived
from the decision of Royal British
Bank v
Turquand (1856) 6 E & B 327; 1
19 ER 886)
as I don't think it is
even remotely relevant here.
[51]
See par 12 on indexed p 16.
[52]
See par 14.1 on indexed p I 08. It is submitted that Erasmus was
financial and legal manager of
another
company named Kusile of which Bird is the
director (see par 4.3 on indexed p 104).
[53]
See par 4.3 on indexed p I 04; see pars I 0.2-10.5 on
indexed p 144.
[54]
See Tuckers Land and Development Corporation
at 17B-C.
[55]
See pars 43 and 44 below.
[56]
See par 6 above; annexure "LB 1" on indexed p
127.
[57]
See annexure ''FA 15" on indexed p 56.
[58]
See par 4 above and annexure "FA I " on indexed p 34.
[59]
See par 35 and its footnote 36 above
[60]
See Harms LTD Amler's Precedents of Pleadings 8
th
ed (LexisNexis SA 2015) on pp 184-187; Rabie PJ (update by Daniels
H) Estoppel in The Law of South Africa (vol9) 8
th
ed(LexisNexis SA 2015) on pp 405-428.
[61]
NBS Bank Ltd v Cape Produce Co (Pty) Ltd and
Others at 412C-D.
[62]
See par 37 above.
[63]
See Jonker v Boland Bank Pks Bpk 2000 ( l )
SA 542 (0) at 549F-550A.
[64]
1982(2) SA l (A).
[65]
See Mc Williams v First Consolidated Holdings at I OE-H.
[66]
Dendy M (original text by JC de Wet) Agency and Representation in
The Law of South Africa (vol 1) 2"d ed (LexisNexis SA
2014) on
p 1 1 1.
[67]
See LA WSA Agency and Representation at par 128 on p 1
15 and the authorities cited there. See
further
Kerr AJ The Law of Agency 4th ed (LexisNexis
Butterworths Durban 2006) on p 18.