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[1984] ZASCA 4
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Malamed and Another v Cleveland Estate Malamed and Another vs Vorner Investments (Pty) Ltd (02/84) [1984] ZASCA 4; [1984] 2 All SA 110 (A) ; 1984 (3) SA 155 (A) (28 February 1984)
IN THE SUPREME COURT OF SOUTH AFRICA
(
APPELLATE DIVISION
)
In the matters between:
JOEL MELAMED AND HURWITZ
appellant
and
CLEVELAND ESTATES (PROPRIETARY)
LIMITED
respondent
and
JOEL MELAMED AND HURWITZ
appellant
and
VORNER INVESTMENTS (PROPRIETARY)
LIMITED
respondent
CORAM
: CORBETT, KOTZE, TRENGOVE, JJA, SMUTS et GROSSKOPF, AJJA
DATE
OF HEARING
: 21 November 1983
DATE
OF
JUDGMENT
: 28 Feb.1984
JUDGMENT
CORBETT
JA
The appellant in each of these appeals is the
/Johannesburg
2
Johannesburg firm of attorneys, Messrs Joel Melamed and Hurwitz
("Melamed
and Hurwitz"). At all material times the senior partner in the firm was Mr Joel
Melamed. As at the time of the trial (ie
August 1981) he had been practising as
an attorney in Johannesburg for some 34 years. For some time prior to the events
with which
these appeals are concerned Melamed and his partner, Mr S Hurwitz,
had been interested in township development. They held financial
interests in
certain townships which were in the process of being established and exploited;
and in addition they, together with
one Simmons, formed and operated a company,
Township Management Consultants (Pty) Ltd ("TMC"), which, as its name indicates,
was
incorporated to carry on the business of establishing and managing townships
and marketing the erven therein on behalf of the township
owners. Melamed,
Hurwitz and Simmons had equal shareholdings in TMC and Melamed was its managing
director.
In approximately 1961 Melamed met Mr Harry Galaun.
/Galaun
3
Galaun became a client of Melamed's. Together, they went into a small
business venture, the details of which are unimportant. In due
course they
became personal friends. Through two companies, Cleveland Estates (Pty) Ltd
("Cleveland"), respondent in the first appeal,
and Vorner Investments (Pty) Ltd
("Vomer") , respondent in the second appeal, Galaun was interested in certain
land, which in Melamed's
opinion was suitable for township development.
Cleveland had owned a property near Halfway House for many years. Galaun had
tried
to establish an agricultural holdings township on the property, but
without success. Galaun sought Melamed's advice as to what could
be done with
the land. After investigating the position, Melamed advised Galaun that the
property would make an excellent residential
dormitory township. Melamed
suggested that a township, to be known as Vorna Valley Township, be established
and that TMC be appointed
the township manager. This was agreed to and in
December 1968 Cleveland and TMC entered into a written agreement in terms
whereof
TMC
/undertook
4
undertook, for a fee, to establish and manage the township
on Cleveland's behalf. In the meanwhile a similar arrangement
had been reached between Vomer and TMC in regard to a property
at Vereeniging, owned by Vorner and known as Unitas Park, and
a written agreement had been entered into by the parties in August
1968. Save for the differences in contracting parties and
subject-matter, this agreement and the Cleveland/TMC agreement
are in identical terms. For convenience, I shall speak, for
the most part, as if there were only one such contract and I
shall refer to it as "the management contract".
In terms of the management contract TMC (referred to therein as "the
Management Company") undertakes to do all such things as may
be necessary to
procure the establishment of a township on the property owned by Cleveland (or
Vorner, as the case may be), which
is called "the Township Owner"; and, to this
end, the management company further undertakes to engage surveyors, to submit
all necessary
applications to the
/ appropriate
5
appropriate local authority, to collect all monies in
respect of sales, to draw up endowment schedules, to
call for necessary
tenders and to make all necessary
arrangements for the reticulation of the
township. The
township owner, on the other hand, undertakes to sign
all
documents needed for the establishment of the township
and authorises the management company to act as its agent
to enter into
contracts necessary for the reticulation of the
township. The contract
further provides that the township
owner appoints the management company as
its sole agent
for the sale of all stands in the township. In return for
its
services the management company is to be paid a commission
of six per
centum on gross sales in respect of all sales
effected and a management fee
of five per centum of the
gross amount received from the sales of all stands
in the
township. Clause 8(a) of the contract reads as follows:
/ "The
6
"The Township Owner agrees that the Management Company shall have the right
to appoint Attorneys, Auditors, Surveyors, Agents and
Auctioneers to act on
behalf of the Township Owner in all matters relating to the establishment of the
Township, transfer of stands
in the Township, any application to court, or any
matters in connection with or appertaining to the establishment of the
township;...."
Thereafter TMC proceeded to take the necessary steps to have the two
townships established. At that time erven in a township could
be sold to the
public before the proclamation of the township, provided that the township owner
had furnished certain guarantees.
This was done, and an advertising and selling
programme was prepared. In May 1971 the stage had been reached when the erven in
the
two townships were ready for sale. TMC arranged for the printing of the
necessary
pro forma
deeds of sale. Several thousand such
pro forma
deeds were printed. The deeds for the two townships differ somewhat in form, but
each contains, in the relative clause governing
the passing of transfer, a
provision to the effect that transfer shall
/be
7
be passed to the purchaser by the seller's conveyancers, who in the one
instance (the Cleveland contract) are stated to be Joel Melamed
and Hurwitz and
in the other (the Vorner contract) as Joel Melamed, Hurwitz and Seligson. It is
common cause that, despite the difference
in the name, the appellant is the
conveyancer nominated in each of the contracts.
For the next ten years the establishment and management of the townships and
the sale of erven therein proceeded in accordance with
the management contract.
After the townships had been proclaimed (in the case of Unitas Park this was in
1973 and 1977 in the case
of Vorna Valley) the erven which had been sold and
paid for were transferred to the purchasers thereof. Galaun, on behalf of either
Cleveland or Vorner, as the case may be, signed each deed of sale. His practice
was to visit TMC's offices four days a week in order
to attend to this business.
According to Melamed, he and Galaun would discuss each sale
/ and
8
and the business of the townships in general on the occasion
of these
visits. When the time came for an erf to be
transferred, TMC would instruct Melamed and Hurwitz to
pass transfer.
Suddenly, in mid-1979, both Cleveland and Vorner terminated TMC's appointment
as management company. Melamed attributed this to "progressive
senility" on the
part of Galaun, who in May 1979 "suddenly decided that he didn't like me
(Melamed) because he said I was doing too
much work for another client by the
name of Hymie Tucker and I was not attending to his work". Early in June a
dispute arose between
Cleveland and Vorner, on the one hand, and TMC, on the
other, in regard to the latter's claims in respect of management fees and
commissions; and on 29 June 1979 the auditors to Cleveland and Vorner, Messrs
Goldstuck Herscovitz and Company ("the auditors"),
addressed a letter to TMC,
the concluding paragraphs of which read as follows:
/ "Our
9
"Our clients, in any event, wish to terminate your appointment as management
company with effect from the 31st day of July 1979, and
on that date we shall be
pleased if you will kindly have all books, records and documents available for
collection by our clients
or their representatives.
Our clients similarly terminate your employment as the sole selling agent
with effect from the same date."
This letter came as something of a bombshell. It elicited replies from both
Melamed and Hurwitz and TMC. On 4 July 1979 Melamed and
Hurwitz addressed to the
auditors two letters, one in respect of the management contract with Cleveland
and one in respect of the
management contract with Vomer. They are substantially
in identical terms. The one to Cleveland reads as follows:
"In terms of a management contract entered into by Cleveland Estates (Pty)
Limited and Township Management Consultants (Pty) Limited
we were appointed as
the Attorneys to attend to all transfers in the township of Vorner Valley. The
benefits flowing from the said
contract were accepted by us and we have been
attending to the transfers of erven under this contract."
/The
10
The auditors responded to these letters by a letter dated 10 July 1979 asking
for information in regard to Melamed and Hurwitz's appointment
as attorneys:
whether it was in writing and, if so, a copy thereof; if verbal, then various
details of the appointment. Melamed and
Hurwitz replied on 24 July 1979 stating
—
"Our appointment was in terms of Clause 8 of the management contract. The
appointment was confirmed on numerous occasions by Mr H
Galaun acting on be-half
of Cleveland Estates (Pty) Limited and Vorner Investments (Pty) Limited."
and refusing further details.
Melamed and Hurwitz addressed a further letter to the auditors on 23 July
1979, but here they were evidently acting on behalf of TMC.
The letter recounts
the history of the management contracts and states,
inter alia
, that "in
regard to the purported cancellation of the management contracts we would point
out that our appointment is an irrevocable
appointment....". The letter also
/purports
11
purports to terminate the appointment of Goldstuck Herscoviz & Co as
auditors to the companies.
On 29 August 1979 attorneys acting on behalf of Cleveland and Vomer addressed
a long letter to Melamed and Hurwitz dealing with the
management fees and sales
commissions claimed by TMC and "the appointment of yourselves as the
conveyancers to attend to the transfer
of the stands". In the letter the view is
expressed that TMC's appointment under the management contract is not
irrevocable and that,
if the companies acted incorrectly in cancelling the
appointment, the only remedy is one in damages. In regard to the appointment
of
Melamed and Hurwitz as conveyancers, claimed also to be irrevocable, the letter
says that such an irrevocable appointment is for
certain (stated) reasons not
enforceable and that consequently the companies were entitled to cancel "the
purported irrevocable appointment".
The letter also contains a demand that
Melamed & Hurwitz hand over the books and documents relating to the
management of the
companies, which this firm was apparently refusing to do.
Melamed
12
Melamed and Hurwitz replied to this letter on 6 September 1979 stating,
inter alia
—
"We again note your advice in regard to our irrevocable appointment as
Conveyancers. Your advice is not based on the correct facts.
Mr Galaun was a
party to our irrevocable appointment as Conveyancers. In any event only our
client has the right to terminate our
mandate".
These various disputes between the parties led to Cleveland and Vomer on 9
October 1979 instituting motion proceedings in the Witwatersrand
Local Division,
citing TMC and Melamed and Hurwitz as respondents and claiming an order
declaring TMC's appointment under the management
contracts and Melamed and
Hurwitz's appointment as conveyancers to have been effectively terminated,
directing TMC to return to the
companies their books, documents and records and
making certain declarations in regard to management fees and commissions. The
matter
came before
/ LE GRANGE J
13
LE GRANGE J on 3 March 1980. The learned Judge concluded that Cleveland and
Vomer were entitled to revoke the appointments contained
in the management
contracts; and that, as it was common cause that the fate of the appointment of
Melamed and Hurwitz as conveyancers
followed the fate of the management
contracts, the companies were entitled to terminate the appointment of Melamed
and Hurwitz. An
appeal against this judgment was noted but not prosecuted.
In August 1980 Melamed and Hurwitz instituted separate actions against
Cleveland and Vomer in the Witwatersrand Local Division, claiming
in each case
damages for the unlawful cancellation of the appointment of the firm as
conveyancer. The pleadings in each case are
substantially identical, the only
differences relating to the number of erven still to be transferred in the
township and the amount
of damages claimed, which in Cleveland's case was R99
645,00
/ (alternatively
14
(alternatively R59 160,00) and in Vomer's case R27 790,00 (alternatively R10
645,00). Again, to avoid unnecessary repetition I shall
refer, in the main, only
to the action against Cleveland.
For purposes of trial the two actions were consolidated. The matter came
before DE VILLIERS J. By agreement between the parties (reached
during the
trial), it was ordered in terms of Rule of Court 33(4) that the question of
liability be decided first and that the further
proceedings, ie as to the
quantum of damages, be stayed until the question of liability had been disposed
of. At the conclusion of
the trial the learned trial Judge came to the
conclusion that Melamed and Hurwitz had failed to establish a liability for
damages
on the part of the two companies and in each case the plaintiff's claims
were dismissed with costs. On appeal to this Court it is
contended on behalf of
Melamed and Hurwitz that the trial Judge's finding on the question of liability
was erroneous.
/In
15
In judging the merits of the appeal it is important, in the first place, to
see how the partnership, Melamed and Hurwitz, pleaded
its cause of action. The
particulars of claim refer to the conclusion of the management contract and to
the provisions of the contract
in terms whereof TMC was appointed as the sole
agent of the company (Cleveland) for the sale of all stands in the township
which
was to be established on Cleveland's property and was given the right (in
clause 8) to,
inter alia
, appoint attorneys to act on behalf of Cleveland
in all matters relating to the transfer of stands in the township. It is alleged
that on a proper construction of the contract TMC was en-titled to appoint
conveyancers on the basis that such conveyancers "were
retained to effect the
transfer of all stands in the said township"; and (in par 4 of the particulars
of claim) that in pursuance
of clause 8 TMC duly appointed Melamed and Hurwitz
as the attorneys to act on behalf of Cleveland, that Melamed and Hurwitz duly
accepted the
/ appointment
16
and that the appointment was,
inter alia
, to act as conveyancers for
the transfer of all stands in the proposed township. As an alternative to par 4,
plaintiff (in par 5)
repeats the contents of par 4 and then proceeds to allege that in or about
February/March 1971 and at Johannesburg Cleveland, acting
through its director,
Harry Galaun, "orally adopted and/or confirmed and/or ratified the said
appointment" and that in the premises
an oral contract came into being between
the parties in terms whereof Melamed and Hurwitz were appointed to act as
conveyancers for
the transfer of all stands in the township. The particulars of
claim further aver the unlawful cancellation of plaintiff's appointment
and the
damages sustained as a result of such unlawful cancellation. The claim for
damages is based upon the fees that plaintiff
would have earned from the
conveyancing work involved in transferring stands in
/ the
17
the townships had its appointment as conveyancer not been cancelled. It
should be noted that the case is not concerned with those
instances where prior
to the termination of its appointment Melamed and Hurwitz had received specific
instructions to pass transfer.
It relates only to those stands in the townships
which were to be transferred at some undefined time in the future. In addition,
a further alternative cause of action, based upon an alleged stipulation for the
bene-fit of a third party, is set forth in the particulars
of claim (as
amended). In this regard it is alleged that in terms of the various deeds of
sale entered into with purchasers of erven
in the township the firm of Melamed
and Hurwitz was appointed as conveyancer to attend to transfer of the property,
that this appointment
was a stipulation for the benefit of Melamed and Hurwitz
and that the latter accepted this benefit. There then
/ follows
18
follows an allegation that as a result of the unlawful cancellation of
plaintiff's appointment damages (in a lesser sum than in terms
of the main
claim) were suffered by plaintiff.
In a request for further particulars to plaintiff's particulars of claim,
defendant asked a number of questions regarding the appointment
of Melamed and
Hurwitz as conveyancers by TMC, as alleged in par 4. From the answers furnished
it appears that plaintiff alleges
that TMC appointed Melamed and Hurwitz "in and
during June 1971"; that the appointment was made at the offices of Melamed and
Hurwitz;
that the appointment was tacit; that Joel Melamed acted both on behalf
of TMC, ie in making the appointment, and on behalf of Melamed
and Hurwitz, ie
in accepting the appointment; and that Joel Melamed, on behalf of Melamed and
Hurwitz, conveyed such acceptance
/to
19
to himself, on behalf of TMC. The request also asked what was unlawful about
the cancellation of plaintiff's appointment, to which
plaintiff replied that it
was unlawful in that it constituted a breach of contract.
The cause of action on the main claim is thus an unusual one: it is based
upon the allegation that in June 1971 Joel Melamed concluded
a tacit contract
with himself, he having acted therein in two different representative
capacities, viz. as managing director of TMC,
on behalf of TMC, on the one hand
and as partner in the firm of Melamed and Hurwitz, on behalf of Melamed and
Hurwitz, on the other
hand. I shall later have some observations to make about
such a cause of action. At this stage I would merely add that the plea puts
in
issue,
inter alia
, the making of such a tacit appointment, as also the
two alternative claims.
At the trial the only witness to give evidence
/
was
20
was Joel Melamed. It appears that the other person vitally interested, Harry
Galaun, had died on 7 September 1980, not long after
the institution of these
proceedings and about a year before the commencement of the trial. He was,
therefore, not available to give
evidence.
In evidence-in-chief Melamed described his relationship with Galaun and the
events leading up to the conclusion of the management
contract. He stated that
prior to the signing of this contract he had a dis-cussion with Galaun. He
pointed out to Galaun that other
township management companies were charging an
establishment fee of between 10 and 1.5 per centum, but that he (meaning TMC)
was
prepared to agree to a fee of only 5 per centum since he anticipated that
there would be "additional perks" to come from the establishment
of the
township, viz. the transfer costs which would be paid by various purchasers to
Melamed and Hurwitz as conveyancers; and that
"one of
/ the
21
the conditions" for charging a reduced fee was that "all the transfers in the
townships had to come to my firm". Galaun readily agreed
to this. When the deeds
of sale came to be prepared and printed, Melamed advised Galaun that, pursuant
to their original arrangements,
Melamed and Hurwitz was to be nominated therein
as conveyancer for stands in the township. From the time that the management
contract
was signed Galaun's attitude was that Melamed was in charge of the
townships and was to do everything he thought fit in the interests
of the
townships. Said Melamed in evidence: "He (Galaun) relied upon me implicitly".
He, Melamed, caused the relative clauses in
the deeds of sale to contain a
provision nominating Melamed and Hurwitz as conveyancer. In so nominating he
acted on behalf of TMC
and in accepting he acted on behalf of his firm. At all
times Galaun knew that Melamed and Hurwitz was nominated to attend to the
transfer of stands in the townships,
/ firstly
22
firstly because of the initial discussions between Melamed and himself,
secondly because of the discussion regarding the drawing up
of the deeds of sale
and thirdly because he accepted and signed each deed of sale.
Melamed then proceeded in evidence-in-chief to describe the termination of
the management contract, the subsequent disputes and correspondence
between the
parties and the basis of the damages claim. (At that stage the agreement to
limit the issues to that of liability had
not been reached.) I shall refer later
to some of the evidence given by Melamed under cross-examination.
In his judgment, the trial Judge focused attention on Melamed's evidence to
the effect that prior to the conclusion of the management
contract he arrived at
an express oral agreement with Galaun that Me Lamed and Hurwitz would attend to
the transfer of all the stands
in the townships.
/ He
23
He held that this was an aspect of Melamed's evidence which did not impress
him, particularly as there had been no prior mention of
such an agreement,
either in the motion proceedings or in the pleadings in the instant case. He
felt constrained to find that Melamed
did not enter into such an express
agreement with Galaun prior to the signing of the management contract. The
learned Judge pointed
to certain probabilities "which may be argued in favour of
Melamed's version", but concluded that they were "equally consistent"
with an
approach on Melamed's part that the management contract was not revocable. He
referred to certain other grounds upon which
Melamed's evidence could be
criticized (I shall elaborate upon these later) and in the end found that "very
little, if any weight"
could be attached to Melamed's evidence. The learned
Judge concluded:
"He (Melamed) has not satisfied me as to the existence of any express
agreement which Galaun entered into prior to the signing of
Annexure "A".
In the light of the aforegoing it also follows that the plaintiff has not
/ made
24
made out a case in respect of the alternative claim.
In the result the plaintiff's claim and counter-claim (meaning alternative
claim) in each case are dismissed with costs."
It seems to me, with respect, that in regard to the main claim the trial
Judge failed to address himself to the real issues in the
case, viz. (i) whether
it had been established that Melamed, in his capacity as managing director of
TMC, had concluded a tacit agreement
with himself, in his capacity as partner in
the firm of Melamed and Hurwitz, in terms whereof the firm was appointed to act
as conveyancers
for the transfer of all stands in the townships in question; and
(ii) whether the cancellation of this appointment constituted a
breach of
contract in respect of which the firm of Melamed and Hurwitz was entitled to
claim damages. I proceed now to consider these
issues.
At the outset it is necessary to say something
of
the legal principles involved. The question whether a
person can, as
representative of another, contract with
/ himself
25
himself, either in his personal capacity or as representative of a third
person, is discussed in the title in LAWSA treating of Agency
and
Representation, written by Prof J C de Wet (see LAWSA, vol 1, par 107 and 108).
Despite the contrary view expressed by Prof De
Wet, I shall assume in favour of
Melamed and Hurwitz that it was legally competent for Melamed, in his capacity
as Managing Director
of TMC, to make a contract with himself, in his other
capacity as partner in the firm of Melamed and Hurwitz, in terms whereof the
latter was appointed as conveyancer for all the erven in the townships.
A novel feature of appellant's main cause of action is that Melamed is not
only alleged to have contracted with himself in two different
capacities, but
also to have done so tacitly. 1 know of no case — and certainly none was
quoted to us — where such a
cause of action has been considered by our
courts.
As to tacit contracts in general, in
Standard
Bank
/of
26
of SA Ltd v Ocean Commodities Inc
,
1983 (1) SA 276
(AD)
it was stated (at p 292 B - C):
"In order to establish a tacit contract it is necessary to show, by a
preponderance of probabilities, unequivocal conduct which is
capable of no other
reasonable interpretation than that the parties intended to, and did in fact,
contract on the terms alleged.
It must be proved that there was in fact
consensus
ad
idem
. (See generally
Festus v Worcester
Municipality
,
1945 CPD 186
at 192-3;
City of Cape Town v Abelsohn's
Estate
,
1947 (3) SA 315
(C) at 327-8;
Parsons v Langemann and Others
,
1948 (4) SA 258
(C) at 263;
Bremer Meulens (Edms) Bpk v Floros and
Another
, a decision of this Court reported only in Prentice Hall, 1966 (1)
A36;
Blaikie-Johnstone v Holliman,
1971 (4) SA 108
(D) at 119 B-E;
Big
Dutchman (South Africa) (Pty) Ltd v Barclays National Bank Ltd,
1979 (3) SA
267
(W) at 281 E-F;
Muhlmann v Muhlmann
,
1981 (4) SA 632
(W) at 635 B-D.)
"
This is the traditional statement of the principle, as is borne out by the
cases cited; and it was accepted as being correct by appellant's
counsel. The
correctness of this general formulation has nevertheless been questioned
/ on
27
on the ground that it would appear to indicate a higher
standard of proof than that of preponderance of probability as regard the
drawing of inferences from proven facts (see Christie,
The Law of Contract in
South Africa
, pp 58-61; cf also
Fiat SA v Kolbe Motors,
1975 (2) SA
129
(0), at p 140;
Plum v Mazista Ltd
,
1981 (3) SA 152
(AD), at pp 163-4;
Spes Bona Bank v Portals Water Treatment
,
1983 (1) SA 978
(AD), at p 981
A-D). In this connection it is stated that a court may hold that a tacit
contract has been established where, by a
process of inference, it concludes
that the most plausible probable conclusion from all the relevant proved facts
and circumstances
is that a contract came into existence (see
Plum
's
case, supra, at pp 163-4). It may be that in the light of this the principle as
quoted above from
Standard Bank of SA Ltd v Ocean Commodities Inc
(
supra
) requires reformulation. In this regard, however, there is this
point to be borne in mind. While
/it
28
it is perfectly true that in finding facts or making inferences of fact in a
civil case the court may, by balancing probabilities,
select a conclusion which
seems to be the more natural or plausible one from several conceivable ones,
even though that conclusion
is not the only reasonable one, nevertheless it may
be argued that the inference as to the conclusion of a tacit contract is partly,
at any rate, a matter of law, involving questions of legal policy. It appears to
be generally accepted that a term may not be tacitly
imported into a contract
unless the implication is a necessary one in the business sense to give efficacy
to the contract (see Van
den Berq
v Tenner
,
1975 (2) SA 268
(AD), at pp
276 H - 277 B and the cases there cited). By analogy it could be said that a
tacit contract should not be inferred unless
there was proved unequivocal
conduct capable of no other reasonable interpretation than that the parties
intended to, and did in
fact, contract on the terms alleged. Be that as
/it
29
it may, this is not the occasion to resolve these problems.
The point was not argued and, on the view I take of the facts, it is not
necessary to decide what real difference, if any, there is between the
viewpoints outlined above or to express a preference for one
or the other.
In the cases concerning tacit contracts which have hitherto come before our
courts, there have always been at least two persons involved;
and in order to
decide whether a tacit contract arose the court has had regard to the conduct of
both parties and the circumstances
of the case generally. The general approach
is an objective one. The subjective views of one or other of the persons
involved as
to the effect of his actions would not normally be relevant (cf.
Spes Bona Bank
case (
surpa
), at p 985 B-H). I shall assume, in
appellant's favour, that where there is only one person involved (as in this
case) a tacit
/ contract
30
contract may be inferred from
his
conduct and the
general
circumstances, but in such a case the court should, in my view,
carefully scrutinize" his evidence in order to distinguish between
statements of
fact capable of objective assessment and subjective views as to the matter in
issue.
Next I turn to the nature of the tacit contract alleged by Melamed and
Hurwitz. According to the pleadings it consisted of an appointment
of Melamed
and Hurwitz by TMC (acting, as agent of the township owners, under the
management contract) to act as conveyancers for
the transfer of all stands in
the proposed townships. The conveyance of title to land involves the preparation
of a deed of transfer,
which must be done by a practising conveyancer (see
sec
15
of the
Deeds Registries Act, 47 of 1937
), and, after due scrutiny of the deed
by a Deeds Office examiner, the execution thereof in the presence
/of
31
of the Registrar by the owner of the land, or by a conveyancer authorized by
power of attorney to act on behalf of the owner, and
the attestation thereof by
the Registrar
(sec 20).
The conveyancer appointed to prepare the necessary deed
of transfer and to attend to the execution of the deed before the Registrar
performs a juristic act on behalf of his client, viz. the passing of transfer.
This is, therefore, an instance of representation
in the technical sense of the
term (see LAWSA, vol 1, par 101 et
seq
.). An act of representation needs
to be authorized by the principal. Such authorization is usually contained in a
contract. In the
present case the contract is the tacit one alleged by Melamed
and Hurwitz. The first question which must now be considered is: did
Melamed and
Hurwitz succeed in proving the tacit appointment, or grant to it of an
authority, to act as conveyancers for the transfer
of all stands in the proposed
townships?
/ I have
32
I have already outlined the evidence given by Melamed in chief. In it he did
not refer directly to the tacit appointment alleged in
the pleadings. In
cross-examination, however, he was asked about this. He agreed that he did not,
in his capacity as managing director
of TMC, sit on one side of the desk and
speak to himself, as partner in Melamed and Hurwitz, on the other side of the
desk and formally
appoint himself. He stated that it was a "tacit arrangement".
When asked during his cross-examination on what conduct he relied to
establish
the tacit appointment, his evidence was somewhat confused. Initially he said
that he relied on —
".... the discussions with Galaun initially, on the time when the deed of
sale was drawn and the discussions that I had with Galaun
that Melamed and
Hurwitz were to be nominated in all Deeds of Sale for the purpose of
transfer."
/It
33
It was pointed out to him by counsel that these discussions amounted to
express, not tacit, arrangements. To which he replied that
the discussions with
Galaun were express, "but the acceptance by Melamed and Hur-witz was tacit with
myself". Shortly thereafter
he conceded that the agreement with Galaun was
wholly an express one. When taxed with the question as to why he had not relied
on
this express agreement with Galaun in his pleadings, Melamed stated
—
"But I'm saying that the second stage was when the deeds of Sale were drawn,
that was when TMC appointed Melamed and Hurwitz, that
was the tacit contract
which was to the knowledge and approval of Galaun".
Asked whether he relied simply on conduct for this appointment, Melamed
stated —
/ "No, I
34
"No, I don't rely on conduct. I rely on the arrangements between myself
representing TMC and myself representing Melamed &
Hurwitz".
Reminded that it had been pleaded that the appointment was made tacitly and
that this meant reliance on some form of conduct, Melamed
eventually stated
—
"What happened was I instructed that all the Deeds of Sale had to be prepared
on the basis that Melamed and Hurwitz were nominated
as the conveyancers for the
entire township."
He stated further that the tacit agreement was entered into at the time the
deeds of sale were drawn. This occurred in or about May
1971. His evidence
proceeded —
"All right, then what took place on the date in May when you say the contract
was entered into?-- The Deeds of Sale were drawn and
my firm was nominated
/ as
35
as the conveyancer on all the Deeds of
Sale and I tacitly accepted the appointment.
So all that you rely on is the Deed of Sale?— And the discussion with
Galaun at the time."
Later this version of the tacit appointment was further elaborated as
follows:
"But let me put it to you then, we have the position that as far as TMC is
concerned we have no formal document, no formal appointment,
it's simply one by
conduct?— That is correct.
And the only conduct you rely on is the fact that you as Joel Melamed &
Hurwitz or you as TMC, I'm not sure which, had forms printed?--
No, the conduct
was when I had the forms printed for the purposes of the sale, I nominated my
firm with the intention that my firm
should do the totality of transfers in the
townships.
The only issue is the totality, and that's the only bit we're quibbling
about, where's the totality come from?--
/ The
36
The totality comes from the basis that I never sat down with myself, Mr
Plewman, and had a meeting with myself to draw a contract
in which I said 'I,
TMC, am appointing Melamed & Hurwitz to do all the transfers in the
township'. I do the Deeds of Sale on
the understanding with myself that Melamed
& Hurwitz were nominated as the conveyancers for the entire township."
Here, for the first time, Melamed mentioned "the understanding with myself
that Melamed and Hurwitz were nominated as the conveyancers
for the entire
township". Thereafter, in his evidence, Melamed referred several times to this
understanding or intention on his part
that Melamed and Hurwitz would do all the
transfers in the townships. He agreed that there was no external manifestation
of this
understanding or intention.
/It
37
It is thus evident that in order to establish the alleged tacit contract
Melamed relied (a) partly on overt conduct and circumstances
and (b) partly on
an "understanding" with himself, which consisted merely of the thoughts which
passed through his mind and had no
outward manifestation. I shall assume in
appellant's favour that (b) above can form the basis of a tacit contract.
In assessing the cogency of this evidence as to a tacit contract, there are a
number of factors to be taken into account. Firstly,
there are the
probabilities. I have no doubt that Melamed did, at some stage, discuss with
Galaun the conveyancing work to be done
in connection with the transfer of erven
in the townships and that Galaun was then satisfied to have the work done by
Melamed and
Hurwitz.
/It
38
It seems probable, too, that Galaun was aware of the fact that in the
pro forma
deeds of sale Melamed and Hurwitz had been nominated as
conveyancer and that until the termination of the firm's appointment in mid-1979
it was in fact doing the conveyancing work relating to the townships. I also
accept that it was at all times Melamed's intention
that his firm should do all
the conveyancing work in the townships; that this work was important to his
firm; and that, because of
the peculiar relationship between TMC and Melamed and
Hurwitz, TMC, in the anticipation that Melamed and Hurwitz would do the
conveyancing
work, accepted a lower-than-usual establishment fee. But for two
important factors, these circumstances might be regarded as probabilities
favouring the conclusion of the tacit agreement alleged by Melamed and
Hurwitz.
/ The
39
The first factor is Melamed's belief, at all times until the delivery of
judgment in the application proceedings, that the appointment
of TMC as agent
under the management contract was an appointment in
rem suam
and
irrevocable at the instance of the township owners. Melamed deposed to this
belief on a number of occasions during his evidence.
In his mind this meant that
for the entire life of each of the townships TMC's appointment could not be
revoked and that, inasmuch
as TMC had the right (under clause 8) to appoint
attorneys to attend,
inter alia
, to the transfer of stands in the
townships, Melamed and Hurwitz would do the totality of transfers in the
townships. In the circumstances,
from Melamed's viewpoint, it would not have
been necessary for him to conclude, with himself, a tacit agreement appointing
Melamed
and Hurwitz
/ conveyancers
40
conveyancers for all the erven in the townships. Because of the assumed
irrevocability of the management contract, there was no need
to secure the
future position of Melamed and Hurwitz as conveyancers. Nor was there any reason
why the future position of Melamed
and Hurwitz as conveyancers should, at the
time of the preparation of the deeds of sale or at any other relevant time, have
engaged
the thoughts or aroused the concerns of Melamed. As far as he was
concerned, the management contract was irrevocable and, therefore,
the position
of Melamed and Hurwitz unassailable; and that was the end of the matter. That
this in fact was Melamed's general thinking
is borne out by the fact that no
formal document appointing Melamed and Hurwitz as conveyancers was ever drawn
up. Melamed was cross-examined
about this. He said that a formal document would
have been
/ "totally
41
"totally unnecessary". He had the management contract which he considered to
be irrevocable, and under that management contract he
could make the
appointment, as he stated, "during the life of the management contract".
The second factor is the fact that Melamed and Galaun, who directed the
affairs of Cleveland and Vomer, were very close personal friends
and had been
such for some years prior to the alleged tacit appointment in May 1971. Because
of this close personal relationship,
it was, to use Melamed's own words,
"unthinkable" that Galaun would appoint any attorneys other than Melamed and
Hurwitz to do the
conveyancing work relating to the townships. In fact, in reply
to certain questions by the Court about this use of the word "unthinkable"
Melamed said —
/"... There
42
"... There was no question that we have been awarded the contract, there was
no question of that, there was no question in the ongoing
scene as existed that
Galaun would have appointed anybody else.
It never crossed your mind?--Correct M'lord."
This, therefore, constitutes another reason why it would have been
unnecessary for Melamed to have concluded the alleged tacit contract
with
himself and why it is unlikely that Melamed would have given thought to doing
so.
In my view, these two factors favour the probability that Melamed, secure in
the knowledge that the management contract was irrevocable
and
that, in any
event, it was unthinkable that his good friend Galaun would want any firm other
than
/ Melamed and....
43
Melamed and Hurwitz to do the conveyancing work, would not have given any
thought to a general appointment of Melamed and Hurwitz
as conveyancers, but
would merely have proceeded on an ad
hoc
basis to deal with each transfer
and in each case to give the necessary instructions to, and sign the required
power of attorney in
favour of, Melamed and Hurwitz. And, moreover, this was why
no formal document was executed appointing Melamed and Hurwitz as conveyancers
to attend to the transfer of all stands in the townships. Had Melamed adverted
to the need for such an appointment it seems likely,
in view of the importance
of the matter, that there would have been some written record thereof
/ or
44
or some other outward and unequivocal manifestation of his intentions. After
all, he himself might die and with his death all proof
of this appointment would
be obliterated.
As I have indicated, Melamed relied very much upon the nomination of Melamed
and Hurwitz in the
pro forma
deeds of sale as constituting conduct from
which a tacit contract in the terms alleged should be inferred. To my mind, this
conduct
is equivocal. It is at least equally consistent with a mere intention or
general expectation on Melamed's part, founded on the irrevocability
of the
management contract, that Melamed and Hurwitz would do all the conveyancing in
connection with the townships. Here a sharp
distinction must be drawn between a
general intention that the firm should do all this conveyancing and an intention
to conclude
a contract whereby the firm was appointed to do such
conveyancing.
/ Turning
45
Turning more specifically to the merits of Melamed's evidence,
the trial Judge, as 1 have recounted, held that very little, if any,
weight
could be attached thereto. This adverse credibility finding was based (i) on
Melamed's evidence of an express agreement with
Galaun prior to the signing of
the management contract, which evidence DE VILLIERS J rejected mainly for the
reasons that I have
already indicated; (ii) on Melamed's "uncertainty" under
cross-examination as to whether he ever had such an express agreement with
Galaun; and (iii) inconsistency in Melamed's evidence as to the warmth of his
friendship with Galaun. I do not propose to discuss
these grounds of criticism
in detail. As to (i), I think that it is somewhat strange that Melamed should
not have mentioned this
express agreement in the motion proceedings and should
not have relied thereon, as an alternative cause of action, in the present
case,
but I am not disposed to give as much weight to this factor as the trial Judge
did. Melamed
/ evidently
46
evidently took the view that after the conclusion of the
management contract only TMC had the right to make an appointment of
conveyancers.
And, in any event, as I have already indicated, it seems probable
that Melamed would at least have told Galaun at some stage that
the conveyancing
work was to be done by Melamed and Hurwitz and that Galaun would have acquiesced
therein. As to (ii) above, the
trial Judge quoted in his judgment the relevant
passage from the cross-examination of Melamed. In the course of this Melamed did
say: "I did not have an express agreement with Mr Galaun, I advised Mr Galaun of
what was taking place". This is contradictory of
his earlier evidence and is
confusing, but the answer may be that Melamed was endeavouring to explain at
this stage that only TMC
had the right under the management contract to make an
appointment. As to (iii) above, this criticism seems to be fully justified:
there is a contradiction in Melamed's evidence on this point.
/To
47
To these criticisms I would add the following. Melamed's evidence on the
tacit contract (I have earlier referred to this in more detail)
is, in my
opinion, confused and unconvincing. I gain the impression that he was to a large
extent reconstructing. He partly conceded
this:
"So what has happened throughout, is that you have gone back and looked at
the events and said now what events would it have been
that would have provided
this particular piece of the jig-saw puzzle?— Correct. It is partially a
reconstruction, I concede
that."
Indeed, faulty reconstruction seems to have been the cause of the incorrect
date initially pleaded for the conclusion of the tacit
contract, viz June 1971
(instead of May 1971). When cross-examined about this Melamed explained that two
dates had been "transposed"
by counsel. Seeing that the other date referred to
was February/March 1971 (not May 1971), that it appears in the plaintiff's
particulars
of claim (drawn on 18 July 1980), whereas the other date (June 1971)
appears
/ in
48
in the further particulars thereto (drawn on 17 October 1980)
and that Melamed, an experienced attorney, approved the pleadings, I
have some
difficulty in accepting this explanation.
The trial Judge made no express finding on demeanour. A reading of the
recorded evidence indicates, to my mind, a tendency on Melamed's
part to evade
questions and to fence with counsel. I quote one of several examples. Melamed
was asked whether there had been any
oral acceptance by him of the alleged
stipulatio alteri
when each deed of sale was signed by Galaun. It had
been originally alleged in the pleadings that such acceptance had been "oral,
alternatively, in writing". During the course of a lengthy cross-examination on
this point, he agreed that he did not say to Galaun
"I'm accepting the
stipulatio
" each time a deed was signed. The evidence continues:
/"We
49
"We agree to that - that didn't happen.
Right, no
that couldn't happen.
Right, so there wasn't an oral accep
tance?— No, there was not an
oral
acceptance in that form, but I regarded
my
There wasn't an oral acceptance in any form, Mr Melamed.-- Right, in that
form there was - there was the acceptance in my mind when
Galaun signed the Deed
of Sale, that I accepted.
Mr Melamed, with due respect, I'm asking about an oral acceptance. Are we
agreed there was no oral acceptance?— No, there was
no oral acceptance in
that form.
But there was no oral acceptance at all, agreed?— I did not say to
myself 'I accept the stipulatio', right.
Is the answer there was no oral acceptance at all?— In that form,
no.
Leave out the words 'in that form', was there no oral acceptance?—
There was no oral acceptance, I'll acknowledge that."
Having considered all the evidence in the light of the aforegoing, I am not
satisfied, despite the absence of countervailing evidence,
that a tacit contract
on the terms alleged by Melamed and Hurwitz came into being. In brief my reasons
are that the objective conduct
relied upon, viz. the printing of the
pro
forma
deed of
/ sale
50
sale in which Melamed and Hurwitz is nominated as conveyancer, is, in all the
circumstances, equivocal. Melamed's statement that he
-
"nominated (his) firm with the intention that (his) firm should do the
totality of transfers in the townships"
(and similar statements elsewhere in his evidence) is, in my view, not
sufficient to carry the day. Having regard to the evidence
of Melamed as a
whole, the statement smacks of reconstruction; and, moreover, it is not clear
that in giving this evidence Melamed
was distinguishing in his own mind a
general intention that his firm should do the "totality of the transfers" and an
intention to
conclude a contract whereby his firm was appointed to do this work.
The probabilities do not support the alleged tacit contract.
On the contrary, if
anything, the probabilities are adverse to the appellant's case.
/ This
51
This conclusion renders unnecessary a consideration of the second main issue,
viz. whether the cancellation of the alleged tacit appointment
amounted to a
breach of contract entitling Melamed and Hurwitz to claim damages. This would
depend on whether or not the appointment
was irrevocable, in the sense that the
premature revocation or cancellation thereof constituted a breach of contract
and exposed
the principal to a claim for damages at the suit of Melamed and
Hurwitz. This appears to be a controversial branch of the law (see
e.g.
Price
Bros and Barnes Ltd v Snyman
,
1936 TPD 332
, at p 338;
Cape Dairy and
General Livestock Auctioneers v Badenhorst
,
1937 TPD 282
, at p 287; De
Villiers and Macintosh,
The Law of Agency in South Africa
, 3rd ed., pp
405 et seq, 614 et
seq
; compare Kerr, T
he Law of Agency
, 2nd ed.,
p 194; De Wet and Yeats,
Kontraktereg en Handelsreg
, 4th ed., p 343;
LAWSA, vol 17, par. 16(g); and as to the revocation of a
/ general
52
general retainer given to an attorney, see the English case of
J H Milner
and Son v Percy Bilton Ltd
,
[1966] 2 All ER 894).
The point was not argued
before us. In all the circumstances I do not propose to do more than say that it
is by no means clear to
me that, even if plaintiff had established the tacit
contract alleged, it would have been entitled to damages by reason of the
termination
of its appointment as conveyancer.
For these reasons, I have come to the conclusion that the appellant did not
establish the tacit contract pleaded by it and that appellant's
main claim was,
therefore, correctly dismissed by the Court
a quo
.
The two alternative claims were not strenuously pressed before us. The first
alternative pleaded refers
/ to
53
to the oral adoption, confirmation or ratification by Galaun of the tacit
appointment of Melamed and Hurwitz by TMC. I assume that
this alternative was
inserted to cover the situation should it have been held that TMC did not have
authority to make such an appointment.
Since, however, TMC's authority in this
regard was not disputed and as 1 have held that a tacit appointment was not
established,
this alternative claim becomes irrelevant.
The second alternative claim was based upon the averment that the
"appointment" of Melamed and Hurwitz as conveyancer in each signed
deed of sale
constituted a stipulation for the benefit of Melamed and Hurwitz, which
stipulation the latter had in each case accepted.
With regard to the contract
for the benefit of a third party, or
stipulatio alteri
as it is sometimes
known, it was stated by SCHREINER JA in
Crookes NO and Another v Watson and
Others
,
1956 (1) SA 277
(AD), at p 291 B - F:
/" in the
54
" in the legal sense, which alone
is here relevant, what is not very appropriately styled a contract for the
benefit of a third person is not simply a contract designed
to benefit a third
person; it is a contract between two persons that is designed to enable a third
person to come in as a party to
a contract with one of the other two (
cf
Jankelow v Binder, Gering and Co
.,
1927 TPD 364)
the typical
contract for the benefit of a third person is one where A and B make a
contract in order that C may be enabled, by notifying A, to
become a party to a
contract between himself and A. What contractual rights exist between A and B
pending acceptance by C and how
far after such acceptance it is still possible
for contractual relations between A and B to persist are matters on which
differences
of opinion are possible; but broadly speaking the idea of such
transactions is that B drops out when C accepts and thenceforward
it is A and C
who are bound to each other."
Although this was a minority judgment (concurred in by FAGAN JA), there is
nothing inconsistent therewith in the
/ majority
55
majority judgments and it has generally been regarded as an authoritative
statement of the law (see eg
George Ruggier and Co v Brook
,
1966 (1) SA
17
(N) at p 23 and the cases there cited;
Comm
er
cial and Industrial
Holdings (Pty) Ltd v Braamfontein Industrial Sites (Pty) Ltd
,
1969 (1) SA
479
(T), at p 493 E - H;
Protea Holdings and Another v Herzberg and
Another
,
1982 (4) SA 773
(c), at p 779 G - H). Further, as was pointed out
in the
George Ruggier
case (
supra
, at p 23 H) —
"It is entirely a question whether there is an intention that the third party
can, by adoption of the promise, become a party to the
contract in which it is
embodied".
I do not think that the relevant provisions of the deeds of sale constituted
stipulations for the benefit of a third party (Melamed
and Hurwitz) in the
above-described sense. To demonstrate this I shall refer
/to
56
to the Cleveland contract; but my remarks are equally applicable to the Vomer
contract, which is in similar terms. The relevant portion
of the Cleveland
contract, clause 10, which is headed "Transfer", reads as follows:
"The Purchaser shall pay the costs of this Deed of Sale and all costs of and
incidental to transfer of the property including stamp
and transfer duty.
Transfer of the property shall be passed to the PURCHASER by the SELLER'S
Conveyancers, JOEL MELAMED & HURWITZ,
as soon as the full purchase price
plus interest and all other amounts, charges and costs payable in terms hereof,
have been paid,
provided that the PURCHASER acknowledges that he is aware that
the SELLER cannot, at law, transfer the property to the PURCHASER
until
proclamation of the Township and until transfer has been registered of such
erven as are required to be transferred to the
State or to the Provincial or
Local Authorities concerned, as may be required by the conditions of
establishment of the said Township."
/I
57
I do not think that there can be read into this provision an intention
on the part of the parties to the contract, viz Cleveland and
the purchaser, to
confer upon Melamed and Hurwitz the benefit of being appointed to do the
necessary conveyancing work and an intention
that Melamed and Hurwitz could, by
accepting this "benefit" become a party to the contract. The purpose of clause
10 is to regulate
the passing of transfer as between seller and purchaser and it
makes certain provisions in that regard. The clause contains no express
promise
in favour of Melamed and Hurwitz and no express benefit is conferred upon that
firm. Melamed and Hurwitz are merely mentioned
incidentally in connection with
the stipulation that transfer shall be passed by the seller's conveyancer. No
doubt it was considered
convenient that the purchaser should know who the
seller's conveyancer was. I think
/ that
58
that both parties would have been surprised to be told that in agreeing to
clause 10 they were not only conferring this "benefit"
on Melamed and Hurwitz
but also permitting the latter, by acceptance, to come in as a party to the
contract.
The uncertainty and confusion surrounding appellant's case on the question of
acceptance reinforce, I think, the point that this clause
10 was never intended
to contain a contract for the benefit of a third party. As 1 have indicated, it
was pleaded originally that
the benefit was accepted in each case orally or,
alternatively, in writing. In cross-examination, after a certain amount of
skirmishing
(partly illustrated by one of the passages from his evidence quoted
above), Me Lamed conceded that the alleged acceptance was neither
oral nor in
writing, but tacit. He was asked, "Tacitly by what conduct?", to which he
replied:
/ "By
59
"By my conduct in asking Galaun to sign the deeds of sale and accepting it
tacitly in my own mind there and then."
Further cross-examination revealed that he was not present every time that a
deed of sale was signed. This also introduces problems
in regard to the proof of
acceptance.
In general, I do not think that appellant established its case in regard to
the alternative claim based upon an alleged
stipulatio
alteri.
The appeals are accordingly dismissed with costs, which shall include the
costs of two counsel.
M M CORBETT
KOTZE JA)
TREVGORE JA) CONCUR.
SMUTS AJA GROSSKOPF AJA)