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[2006] ZASCA 128
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Mano et Mano v Nationwide Airlines (Pty) Ltd and Others (606/05) [2006] ZASCA 128; [2007] 2 All SA 227 (SCA); 2007 (2) SA 512 (SCA) (30 November 2006)
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REPUBLIC
OF SOUTH AFRICA
THE SUPREME COURT OF APPEAL
OF
SOUTH AFRICA
Reportable
Case Number : 606 / 05
In
the matter between
MANO ET MANO APPELLANT
and
NATIONWIDE AIRLINES (PTY) LTD FIRST RESPONDENT
NATIONWIDE AIR CHARTER (PTY) LTD SECOND RESPONDENT
VERNON
BRICKNELL THIRD RESPONDENT
Coram
: ZULMAN, FARLAM, CONRADIE, MAYA JJA et
THERON AJA
Date of hearing
: 20 NOVEMBER 2006
Date of delivery
: 30 NOVEMBER 2006
SUMMARY
Agent's claim for commission arising from the sale of
two Boeing 737-200 aircraft - first sale falling through because
aircraft sold
to rival purchaser - aircraft again put on market
following cancellation of sale - imminent change in aviation
regulations dictating
new need for aircraft purchases - observing
advertisement for same aircraft in trade journal - negotiating sale
directly with seller
- agent not effective cause of sale of aircraft.
Neutral citation: This
judgment may be referred to as:
Mano
et Mano v Nationwide Airlines (Pty) Ltd and Others
[2006] SCA 156
(RSA)
___________________________________________________________________________
J
U D G M E N T
___________________________________________________________________________
CONRADIE JA
[1] The
appeal started as a trial before Snyders J in the Johannesburg High
Court. Judgment went against the first respondent, Nationwide,
which
was ordered to pay to the appellant, Mano, an aircraft broker,
commission on the sale of two aircraft by El Al Israel Airline
to
one of Nationwide's associated companies. The airline's request for
leave to appeal was turned down by the trial court but leave
to
appeal to the full court was granted by this court. The full court
reversed the trial court's decision. The present appeal is
before us
with special leave from this court.
[2] None
of the essential and straightforward facts of the case is disputed.
Early in 1999, or it may have been late in 1998, Nationwide
represented by its chief executive officer, Mr Vernon Bricknell
agreed with Mr David Stark, Mano's sole director, that Mano would
look out for aircraft to gradually replace Nationwide's fleet of BAC
111's. Its commission would be one percent of the purchase price
of
an aircraft. Towards the end of April 1999, El Al, at Stark's
request, sent him specifications for two aircraft, both Boeing
737-200's,
so-called sister ships, built at about the same time and
so equipped with the same engines and technology, desirable features
for
an airline when it comes to keeping fleet maintenance costs down.
[3] The
specifications were forwarded to Bricknell and were swiftly followed
by the draft of a 'Mutual Non-Circumvention, Non-Disclosure
Agreement', the purpose of which was to ensure that Nationwide would
not go behind Mano's back and conclude a sale with any potential
seller of an aircraft located by Mano. The agreement was not signed
by Nationwide. Whether or not Nationwide nevertheless orally
agreed
to all its terms is not really important. It is common cause that
Bricknell agreed not to circumvent, avoid or bypass Mano
to avoid
payment of commission on any transaction.
[4] Mano
began preliminary negotiations with El Al on behalf of Nationwide but
after about two weeks the aircraft were taken off the
market to
enable El Al to negotiate with a rival purchaser. Nothing came of the
negotiations so Mano continued its endeavours on
Nationwide's behalf.
Stark wrote to Bricknell to confirm that Mano's commission, which
worked out at $50 000 per aeroplane, would
be due ' . . . in the
event that you should go ahead with [an aircraft] that has been
introduced by our company.'
[5] The
beginning of June 1999 saw Bricknell inspecting the two El Al
aircraft at Ben Gurion airport and shortly thereafter Nationwide
made
an offer through Mano, one that was increased when El Al indicated
that there was considerable interest in the aircraft.
[6] El Al
was initially prepared to sell the Boeings to Nationwide and even
forwarded a draft contract of sale to Nationwide but just
as
Bricknell and the airline's chief engineer were ready to conduct a
further and more detailed pre-sale inspection of the aircraft,
El Al
sold the aircraft to another rival purchaser, Aero Al. Mano was
thereupon authorised by Nationwide to find other suitable aircraft
in
Europe. It did not locate any but Nationwide itself found and bought
two Boeing 737's ex Croatia Airlines, the first on 29 July
1999 and
the second on 15 October of that year.
[7] When,
by the beginning of September 1999, the sale of the El Al Boeings to
Aero Al was beginning to look insecure, Stark wrote
to El Al on 6
September 1999 canvassing the possibility of their being sold to
Nationwide if they should come on the market again.
He copied the fax
to Bricknell who, having in the meantime found other suitable
aircraft, did not respond to it.
[8] Mano
did not ascertain the outcome of the El Al and Aero Al transaction.
Both he and Bricknell remained unaware that the sale
to Aero Al had
been cancelled at the beginning of November 1999 and that at the end
of that month the aircraft were back on the market.
Nationwide had by
now bought the two additional Boeing 737's it needed and was for the
time being not interested in any further aeroplanes.
Mano must have
realised this, because after the letter of 6 September, there was no
further attempt by it to broker the sale of aircraft
to Nationwide.
[9] Early
in 2000, Nationwide's legal adviser pointed out to Bricknell that
the civil aviation authorities were about to impose
serious flight
restrictions on Nationwide's BAC 111 fleet by limiting them to an
operational ceiling of 20 000 feet unless the interior
were modified
by the installation of drop-down oxygen masks. Since these
modifications were financially not viable and Nationwide
could not
economically operate the BAC 111's at the restricted altitude,
Nationwide decided for the sake of its profitability to
accelerate
its planned fleet renewal by replacing its BAC 111's with aircraft
meeting the new civil aviation requirements.
[10] Bricknell,
who was now looking out for aircraft once more, noticed the two El Al
aeroplanes advertised in a trade publication
known as Avmark. He
immediately recognised the name of Polonsky, the Manager
Co-ordination and Control at El Al to whom he had been
introduced by
Stark, so he contacted him and began negotiations that, on 10 April
2000, led to the purchase for $8.61m of the two
aircraft by
Aerotrans, a company in the Nationwide fold.
[11] It
became common cause during the trial that Mano's claim for commission
did not depend on the identity of the purchaser: it
was agreed that
it would be payable whether Aerotrans or Nationwide, or indeed any
other entity in the Nationwide fold, had bought
the aircraft. It was
also undisputed that Mano's claim to commission depended on whether
it was the effective cause of the sale by
El Al to Aerotrans, Mano
contending that it was and Nationwide maintaining that it was not.
[12] What,
then, are the criteria for determining whether an agent has been the
effective or efficient cause, or the causa causans,
of a transaction?
Mano was employed by Nationwide, the buyer, to find a willing seller
of aircraft, but that does not distinguish
this case from the line of
estate agents' commission cases where the agent acts for the seller,
so that one might, as the parties
have invited us to do, fruitfully
invoke their guidance.
[13] As
good a place as any to start looking for guidance is the frequently
cited dicta of De Villiers J P in
Le Grange v Metter
1
:
'Our
law with regard to agents' commission has regard to the substance
rather than the form and is singularly free from technicality.
Thus a
broker, or other selling agent, has (in the absence of any express
agreement to the contrary) been held repeatedly to be entitled
to his
commission, when once it is established that he was the "efficient
cause" of the sale, notwithstanding that such
sale may only go
through long after his active efforts have ceased, and
notwithstanding that such sale may eventually be concluded
directly
between the parties without his participation, and notwithstanding
that such sale may go through on different terms and
conditions from
those on which the broker or agent was employed to sell . . . .'
2
[14] In
Schollum & Co v Lloyd
3
the first negotiations resulting from the introduction of a buyer to
the property had been broken off. One of the partners in the
seller,
the partnership which owned the Commercial Hotel at Bloemhof, then
bought out the other and continued the hotel business.
Gregorowski J
discussed the attributes of the intervening cause in that case
4
:
'This
being the state of things, what next occurs is that more than six
months after negotiations had fallen through, after the defendant
had
bought out his partner, and had carried on the business on his own
account, without contemplating a sale, [the buyer] turns up
at
Bloemhof, and commences fresh negotiations, after fresh
advertisements of the property had appeared in the papers. The
plaintiff
has not shown that he had anything to do with this visit of
[the buyer] to Bloemhof, and even if he had, that his employment
still
continued. The question is one of fact. I think the original
employment had been terminated, the original introduction had been
exhausted,
and the visit in 1915 of [the buyer] had nothing to do
with the plaintiff's original exertions. I think the originating
cause was
quite a new one and distinct from what had gone before. It
is quite likely that the visit was brought about by some other cause
entirely
distinct from the acquisition of the property or that it was
prompted by the fresh advertisements which had been inserted by the
defendant's supporters. The element of time is important, and also
the changes which had in the meantime ensued. For these reasons
I
think the plaintiff has failed to prove the facts which are necessary
to establish his case.'
[15] The
fact that negotiations for the purchase of a property may have been
broken off is not sufficient to prevent an agent from
being the
effective cause of a sale.
5
Doyle v Gibbon
is a case of that kind.
6
An estate agent facilitated an introduction but the negotiations led
to nothing. The potential purchaser later returned to the same
street
and on observing the agent's sign recollected that he had previously
inspected the property. He thereupon negotiated with
the owner direct
and bought for a lower sum. In discussing the facts of that case
Wessels J contrasted them with those in
Machonochie's Executrix v
Bidewell-Edwards
7
where the husband of the eventual buyer who had been introduced
to the property by the plaintiff did not want to buy it but was
persuaded
by the 'obstinacy' of his wife to acquire the property
after she had seen it advertised in a newspaper.
[16] The
point of difference is that in
Doyle v Gibbon
'the original
introduction still operated', 'there was no proof', said Gregorowski
J, 'that a new cause had intervened which would
set the owner free
from the paying of a commission.' In
Machonochie's
case a new
cause was considered to have intervened: Not the agent's efforts but
the insistence of the wife resulted in the sale of
the property.
[17] In
the same category as
Doyle v Gibbon
is
Aida Real Estate v
Lipschitz
8
where
Marais J asked
9
,
'
. . . did the new factor outweigh the effect of the introduction by
being more than or equally conducive to the bringing about of
the
sale as the introduction was, or was the introduction still
overridingly operative?'
[18] Often
the intervening cause is alleged to be the efforts of a second agent.
Although every commission claim depends on its own
facts, second
agents seldom seem to succeed: the introduction of a purchaser by the
first agent usually remains the effective, or
as Van den Heever JA
put it, 'the dominant' cause of the sale.
10
[19] Mano
pointed out in argument that at the time Bricknell happened to see
the advertisement for the El Al Boeings he still remembered
dealing
with Ami Polonsky and that it was this recollection that predisposed
him to the two El Al aircraft rather than any of the
others of
similar make and capacity that were advertised on the same page.
Mano's counsel sought to draw from this the inference
that the
introduction was still operative. The difficulty in the way of
accepting this argument is that the topic was not discussed
with
Bricknell in cross-examination. We do not know to what extent the
fact that he had inspected these aircraft before, or had met
Polonsky
before, predisposed him to the purchase of these aircraft. We do not
know, for example, whether he made enquiries from any
of the other
advertisers before settling on the El Al Boeings or what attributes
of the other advertised aircraft he might have found
unsuitable or
undesirable. The factual underlay for the argument sought to be made
by counsel was just not there.
[20] Although
a long time lapse, by itself, does not necessarily deprive a
commission agent of its claim, it is one of the factors
that a court
is entitled to take into account in ascertaining whether the chain of
causation between the introduction and the sale
has been ruptured.
Direct negotiations between buyer and seller resulting in an
agreement on terms that make the sale possible do
not, as we have
seen, generally rupture the chain.
[21] The
only event that is regarded as breaking the chain of causation
between the agent's endeavours and the eventual transaction
is a
sufficiently weighty intervening cause. What such an intervening
cause might be or when it will be weighty enough, depends on
the
facts of each case. In general the question resolves itself into
whether, on balance, it was the agent's exertions that caused
the
purchaser to buy or whether the sale was rather due to the impact of
the intervening cause.
11
[22] In
the present case Mano's exertions not only ceased well before the
sale, a circumstance that in itself may not be decisive,
but from the
time of the sale of the El Al aircraft in June 1999, Mano had no
known prospect of complying with its mandate any longer.
From the
time that Nationwide bought the two ex-Croatian Boeings, Mano's
efforts to find suitable aircraft for Nationwide were confined
to the
letter of 6 September 1999 which it sent to El Al and copied to
Nationwide, but it did not pursue the lead. The parties had
concluded
their business with regard to the El Al aeroplanes and they both knew
it.
[23] The
new aviation regulations unexpectedly made Nationwide's BAC 111 fleet
economically obsolete. It had urgently to replace them.
This, and not
any earlier requirements or negotiations, was the impetus for
Nationwide's decision to re-enter the market for aeroplanes.
The
decision arose from unforeseen developments and were, moreover,
separated from Mano's failed endeavours by a lapse of several
months.
[24] In
the case of the sale of an aircraft, there is an important feature
that is not present in the case of the sale of immovable
property. An
aircraft is really just a consumer durable. It has an operational
life expressed in flying hours. Major, and expensive,
overhauls that
are due periodically affect its selling price at any given time; so
does its age. When it is sold some time after
it was introduced to a
buyer, it is not the same res. This gives the lapse of time in this
sort of transaction a heightened significance.
[25] Mano
also relies on the (disputed) 'Mutual Non-circumvention,
Non-disclosure agreement'. The terms of the agreement do not add
anything to the state of affairs prevailing under the common law. In
agreeing not to circumvent Mano Nationwide undertook not to
deprive
Mano of commission to which it was legally entitled. Since Mano was
not the effective cause of the second sale, it was not
entitled to
commission and there could have been no circumvention of any claim.
[26] Mano
pressed other claims as well, none of which found favour with the
court
a quo
. Its claim for damages is ill-conceived. If it was
not the effective cause of the sale it can have no claim for damages.
The claim
based on delictual damages was only faintly pressed. It has
no merit. It is founded on a supposed duty of care owed by
Nationwide
to Mano not to deal directly with and acquire the aircraft
directly from the seller. It is clear that it must fail for
formulating
a delictual cause of action in wider terms that the
parties' contractual obligations.
The appeal
is dismissed with costs.
J H CONRADIE
JUDGE
OF APPEAL
CONCUR:
ZULMAN JA
FARLAM
JA
MAYA JA
THERON
AJA
1
1925
OPD 76
at 80.
2
On
'efficient cause' see
Eschini v Jones
1929 AD 18
at 28-29.
The onus of proving that an introduction operated right up to the
execution of the deed of sale rests on the plaintiff:
Barnard &
Parry Ltd v Strydom
1946 AD 931
at 938.
3
1916
TPD 291.
4
At
298.
5
Lotz
v Davidson
1928 CPD 514.
6
1919
TPD 220.
7
1892
9 SC 204.
8
1971
(3) SA 871
(W).
9
At
874 A-B.
10
Webranchek
v L K Jacobs & Co Ltd
1948
(4) SA 671(A)
at 683;
Barnard and Parry v Strydom
1946 AD
931:
the second agent was held to be the causa
causans of the
sale, but see the dicta at 936; in
Gordon v Slotar
1973 (3)
SA 765
(A) an attempt by a second agent to sell the property by
public auction was held to be the causa causans of the sale;
Wakefield & Sons (Pty) Ltd v Anderson
1965 (4) SA 453
(N);
Munitz v Steer's Trust Co (Pty) Ltd
1993 (2) SA 369
(C);
Howard and Decker Witkoppen Agencies and Fourways Estates (Pty)
Ltd v De Sousa
1971 (3) SA 937
(T).
11
For
a case in which a wife's pregnancy, an improvement in financial
position and an unexpected windfall were held to be sufficiently
weighty intervening causes, see
Basil Elk Estates (Pty) Ltd v
Curzon
1990 (2) SA 1
(T).