Lesotho National Life Assurance Company Limited v Standard Bank Unit Trusts Limited (770/2002_) [2005] ZAFSHC 29; ; (24 February 2005)

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[2005] ZAFSHC 29
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Lesotho National Life Assurance Company Limited v Standard Bank Unit Trusts Limited (770/2002_) [2005] ZAFSHC 29; ; (24 February 2005)

IN THE HIGH COURT
OF SOUTH AFRICA
(ORANGE
FREE STATE PROVINCIAL DIVISION)
Case No. : 770/2002
In
the matter between:
LESOTHO
NATIONAL LIFE ASSURANCE
PLAINTIFF
COMPANY
LIMITED
and
STANDARD
BANK UNIT TRUSTS LIMITED
DEFENDANT
CORAM:
VAN
COPPENHAGEN J
HEARD ON:
17,
18, 19 FEBRUARY 2004
1, 2, 3, 4 FEBRUARY
2005
JUDGMENT:
VAN
COPPENHAGEN J
DELIVERED ON:
24
FEBRUARY 2005
[1] An investment of R10
000 000,00 by Lesotho National Insurance Co (Pty) Ltd on the 8
th
June 1995 at a rate of 16,96% with Standard Bank Trust Managers Ltd
matured on the 7
th
June 2001 at a guaranteed value of R16 000 000,00.
[2] In
the interim several changes to the roll-players and the structures of
the legal entities initially involved took place.
The investor, Lesotho
National Insurance Co (Pty) Ltd, as legal entity disappeared and
three new public companies Lesotho National
Insurance Holding Ltd
(LNIH), Lesotho National Life Assurance Co Ltd (LNLAL) in which
African Life Insurance was a stakeholder (plaintiff)
and Lesotho
National General Insurance Co Ltd (LNGIL) were formed.
Mr. Babu, the initial
negotiator on behalf of LNIC who graduated from Chief Accountant to
Financial Controller in Lesotho National
Insurance Co Ltd, was
appointed as Financial Advisor to the three public companies referred
to above.
Mr.
Kaltenbrunn, stationed at Ladybrand, a roll-player and an employee of
Standard Bank Financial Services (Pty) Ltd (Stanfin) during
the
negotiations in 1995 resigned; in fact the offices of Stanfin in
Ladybrand were closed.
Stanfin as entity simply
became usurped in the Standard Bank of South Africa Ltd and
disappeared and Standard Bank Fund Managers Ltd
had its name changed
to Stanlib Ltd.
[3] The allegations
relevant to plaintiff’s cause of action and issues involved reads
as follows:
“
3. On or about 19 June 1998 at
Bloemfontein, Plaintiff, represented by Lesotho National Insurance
Holdings Ltd, which was represented
by C Khomari, and Defendant,
represented by Standard Bank Financial Services (Pty) Ltd, which was
represented by S L J van Jaarsveldt,
concluded a written agreement,
the terms and conditions of which are reflected in the correspondence
annexed hereto, marked Annexures
“A”, “B” and “B2”.
4. The
following were material terms and conditions of the said agreement,
which terms were express, alternatively implied, alternatively
tacit:
4.1 Plaintiff would invest an amount
of R16 million with Defendant;
4.2 the investment would be for a
fixed term, expiring on 7 June 2001, upon which date the investment
and all growth thereon (‘the
maturity value’) would become
payable to Plaintiff by Defendant;
4.3 the maturity value of the
investment was guaranteed to have a value of R25 278 400,00 on 7 June
2001;
the R16 million investment
comprised;
4.4.1 a sum of R9 600 000,00 which was
to be invested on behalf of Plaintiff’s Corporate Bodies Pension
Scheme;
a sum of R6 400 000,00 which was to
be invested on behalf of Plaintiff’s Life Division;
4.5 the maturity value of the
investment referred to in paragraph 4.4.1 at 7 June 2001 was
guaranteed to be R15 167 040,00;
4.6 the maturity value of the
investment referred to in paragraph 4.4.2 at 7 June 2001 was
guaranteed to be R10 111 360,00;
4.7 Defendant was required to issue
certificates in the names of Plaintiff’s two divisions as set out
in paragraph 4.4.1 to 4.6.
7. The investments matured on 7 June
2001, alternatively 9 June 2001, on which date the aforestated
guaranteed maturity values of
the investments became due, owing and
payable to Plaintiff by Defendant.
9. On or about 17 October 2003,
Defendant paid an amount of R21 680 994,08 into Plaintiff’s bank
account, leaving a balance in respect
of the capital amount of R3 597
405,92 remaining due and payable.
10. The cause of action arose within
the jurisdiction of this Honourable Court.”
[4] The substance of the
allegations by plaintiff were denied by defendant in its plea,
pertinently challenging the jurisdiction of
this Court, the authority
of the said Van Jaarsveldt and/or Stanfin to act on behalf of
defendant.
[5] In reply to
defendant’s challenge to the allegations that Stanfin and/or Van
Jaarsveldt were authorised to act on behalf of
the defendant,
plaintiff alleges:
“
2. In
the event, however, of this Honourable Court’s finding that
Standard Bank Financial Services (Pty) Limited (Stanfin) and/or
Van
Jaarsveldt was not duly authorized, Plaintiff replies that Defendant
is estopped from denying the authority of Stanfin and/or
Van
Jaarsveldt for the following reasons:
2.1 For many years, Plaintiff
conducted business and placed investments with Defendant through the
agency of Stanfin.
In 1995 Stanfin, had, through its
employee and Van Jaarsveldt predecessor, E Kaltenbrunn, negotiated
and concluded an agreement
on behalf of the Defendant with the
Lesotho National Insurance Group in respect of an investment of R
10 Million with a guaranteed
maturity value of R 16 Million, after
three years, on 8 June 1998.
This investment was reinvested with
Defendant through Van Jaarsveldt in a similar manner, which
reinvestment was accepted by Defendant.
At no time prior to accepting this
reinvestment did Defendant inform Plaintiff that Stanfin was not
authorised to procure the
investment.
Both Defendant and Stanfin were
wholly owned subsidiaries of Standard Bank Limited and part of the
same group of companies.
They were both engaged in rendering
financial and investment services to the public.
The very names ‘
Standard
Bank
Financial Services
(Pty) Limited’ and that of Defendant ‘
Standard
Bank
Fund Managers’
confirm and reinforce the connection.
The letterhead used by Stanfin on
its correspondence (which incorporated the same Standard Bank logo
used by Defendant), its place
of business in Bloemfontein (which
was in the Standard Bank Building), and the business cards of its
employees, such as Van Jaarsveldt,
(which included the same
references), all contributed further to the perception that Stanfin
was a duly authorised agent of Defendant.”
The aforementioned
allegations were repeated as further particulars to a request for
further particulars for purposes of trial and
plaintiff’s heads of
argument as submissions on its behalf.
[6] At the conclusion of
plaintiff’s evidence and the close of plaintiff’s case, an
application of absolution was submitted, but
dismissed.
At the conclusion of the
case two main issues arose for consideration and adjudication;
firstly whether this Court is clothed with
jurisdiction to hear the
matter and secondly whether Van Jaarsveldt and/or Stanfin was
authorised by defendant to conclude the contract
as alleged by the
plaintiff.
AD
: JURISDICTION
[7] Plaintiff, in
argument, relies on annexures “A”, “B1” and “B2” to its
particulars of claim as the documents embodying
the contract between
the parties, submitting that annexure “A” which was sent to
plaintiff in Maseru, contains the offer by plaintiff
which was
accepted as per annexure “B”, a letter addressed to and received
by plaintiff in Bloemfontein. Thus construed, plaintiff
argues that
the contract came into existence in Bloemfontein as the place when
and where the offeree’s acceptance was communicated
to and received
by the offeror. (
JAMESON
v SABINGO
2002 (4) SA 49
(SCA) 54 B – C.)
Defendant contends that
because both parties are
peregrini
,
jurisdiction can only be found if the cause of the action arose
within the jurisdiction of this Court, it is that the contract
contended
for by plaintiff came into existence in Bloemfontein.
Elaborating on the submissions, defendant argued that at the very
least or
very best for plaintiff annexure “B1”, contains a
counteroffer by plaintiff, the acceptance whereof was communicated to
and received
as per plaintiff in annexure “B2”. Thus construed,
the contract, so it was argued, came into existence in Lesotho, more
particularly
Maseru which is not within the area of jurisdiction of
this Court.
[8] Annexure “A”, a
letter to Stanfin addressed to plaintiff in Maseru reads:
“LNIC
Private Bag A65
MASERU
0100
Attention
: Mr KC Babu
17
June 1998
Dear
Mr Babu
RE : CAPITAL GUARANTEED GROWTH
PLAN QUOTATION
We have pleasure in providing you with
the following quotations:
Renewal
Investment of R 16 Million
Guaranteed
(After 3 Years) R25 278 400,00
I
trust that the above will meet with your approval.
Yours
faithfully
SLJ
van Jaarsveldt
Consultant”
Annexure “B1”, a
letter by Lesotho National Holdings Ltd reads:
“
LESOTHO
NATIONAL INSURANCE HOLDINGS Ltd.
Standard
Bank Financial Services
P.O. Box 3791
Bloemfontein
19 June 1998 Fax: 00 27 51 4470810
Dear
Sirs
For
the Attention of Mr. SLJ Van Jaarsveldt
Deposit
of R 16 Million
We refer to your quotation of 17 June
1998 and in accordance with the quotation
would
like to renew the deposit
for a further period of three years
from
the date of maturity on 8.6.1998 to 7.6.2001.
We understand from your quotation that R.16 Million reinvested on
8.6.1998 will be guaranteed to have a value of R.25 278 400 on
7.6.2001.
Two
certificates should be issued in the following manner:
1.
Name of Client Lesotho National Life
Assurance Company Ltd
Corporate
Bodies Pension Scheme
P
Bag A 65 Maseru, Lesotho.
Amount
Invested R 9 600 000.
Date
Deposited 8.6.1998
Date
of Maturity 7.6.2001
Guaranteed Maturity
Value R
15 167 040.
2.
Name of Client Lesotho National Life
Assurance Company Ltd
Life
Division
P
Bag A 65 Maseru, Lesotho
Amount
Invested R 6 400 000.
Date
Deposited 8.6.1998
Date
of Maturity 7.6.2001
Guaranteed
Maturity
Value R
10 111 360.
Please confirm the above by signing
and returning the duplicate of this letter.
Yours
faithfully
C.Khomari
Financial
Controller.”
(My emphasis)
In response to annexure
“B1” Stanfin by means of Van Jaarsveldt addressed per fax to
plaintiff in Maseru as per annexure “B2”
the following:
“
FAX
To:
LNIC
From:
Louw
van Jaarsveldt
Fax:
09266-310007
Pages:
1
Phone:
09266-313031
Date:
23/6/98
Re:
Renewal Dep R16 million
CC:
ͪ
Urgent ͪ For Review ͪ Please Comment ͪ Please Reply ͪ Please
Recycle
ATT Carol K. Khomari
Comments:
I acknowledge your fax dated 19/6/98
and confirm that the R16 million is renewed as requested from
8/6/1998.
Regarding the new deposit that is
available on the 6/7/1998 I will personally be in Maseru at your
office at 12:00.
We thank you for your support.”
[9] The evidence of Mr.
Babu, the representative of the plaintiff and draughtsman of annexure
“B1” is informative and conclusive
regarding the intention of
plaintiff (c.f.
AUSSENKEHR
FARMS (PTY) LTD v TRIO TRANSPORT CC
2002 (4) SA 483
(AA) at 493 paragraphs 24 and 25) in addressing
annexure “B1” to Stanfin. His evidence in this regard reads:
“
You say in this letter, I refer to
you as you the
drafter,
that:
‘
Lesotho National Insurance Holdings
would like to renew the deposit for a further period of three years.’
You
see that? --- Which number is that?
Page
83. I am reading from the second line of the body of the letter. ---
Yes, we would like to renew the deposit for a further period
of three
years.
You
say in the second sentence, which is in the third line:
‘
We
understand from your quotation …’
And
so on. Do you see that? --- Yes.
Over
the page, if you will turn to page 84. In the last sentence you say:
‘
Please
confirm the above.’
Does that mean that Lesotho National
was seeking an acceptance of the proposal which was being put in this
letter? --- Yes.
Because
you knew that you needed to confirm the rate, did you not? --- The
rate, there was no further confirmation required of the
rate.
Well,
you could not confirm a quotation three months later, could you? ---
The quotation was not three months later.
I
am putting to you a hypothetical situation. The letter containing
the quotation was dated two days prior to this letter? --- Yes.
You
know those letters from prior correspondence that there is much talk
about rates changing on a daily basis? --- Yes.
So
you knew that you required a confirmation from the institution that
this proposal was acceptable to them, is that not right? ---
Yes.
What
is more, you required the investment to be done in a particular
fashion, you wanted it in the name of two separate companies.
Is
that not right? --- Under the name of one company under two different
funds.
One
company and? --- Two different funds.
Two
different? --- Types, both in the name of … (intervenes).
Life
Division and Corp[orate Body Pension Scheme? --- Both in the name of
Lesotho National … (intervenes).
Yes,
I see that, I apologise. It is the same company, two different …
(intervenes). --- Funds.
Divisions,
can we call them divisions? --- No, two different funds.
Two different funds. You required
confirmation also that that would be done? --- Yes.
You also wanted the institution to
accept that the deposit would run from 8 June 1998, did you not? ---
Yes, it is very important.
Yes,
so that proposal is put in the letter where you say:
‘
We
would like to renew for a further period of three years from 8 June
1998.’
That
was important to you? --- It is very important, yes.
You
wanted Stanfin to accept that, is that not right? --- Yes.
And
that is why in your letter you drafted:
‘
Please
confirm the above by signing and returning the duplicate of this
letter.’
---
Yes.
There
was a difference form of acceptance, was there not, Van Jaarsveldt,
well, let me put it this way: neither Van Jaarsveldt nor
anyone else
signed this letter, is that correct? --- Which letter?
The
letter at page 83. Look at the last sentence of that letter which is
at page 84. --- That was C. Khomari, Financial Controller.
Yes,
but read the text before ‘yours faithfully’”
‘
Please
confirm the above by signing and returning the duplicate of this
letter.’
---
Yes.
Yes,
that was not done. What happened is that you got an acceptance of
this proposal on 23 June at page 88, is that not correct?
---
Yes.
Do you accept that there on 23 June,
Van Jaarsveldt writing on a Stanfin letterhead purports to accept
this proposal which is contained
in your letter of 19 June? I say
‘purports’ because there is an issue about his authority. ---
Yes.
Do you accept that? --- Yes.
Thank
you. Just on that point, …….”
From the above it must
follow that Babu required acceptance of the terms at set out in
annexure “B1” and that legally construed
annexure “B” must be
interpreted as an offer or counter offer, acceptance whereof was
communicated by means of annexure “B2”
which was received by
plaintiff in Maseru.
[10] The aforegoing
conclusion required the assumption that Stanfin represented by Van
Jaarsveld was authorised by defendant to conclude
the alleged
agreement.
As
mentioned earlier the alleged authority of Stanfin and as represented
by Van Jaardveldt is an issue.
AD
: AUTHORITY OF STANFIN AND/OR VAN JAARSVELDT
[11] Mr. Viljoen, on
behalf of plaintiff, conceded that plaintiff did not prove that Van
Jaarsveldt as representative of Stanfin or
Stanfin for that matter
was in fact authorised to conclude the contract as alleged by the
plaintiff. He, however, argued, that (I
quote from the heads of
argument in reply to defendant’s heads of argument):
“
While
defendant understandably seeks proof that each and everyone of the
representations relied upon by plaintiff emanated from defendant
and
defendant alone, that is not what is required. It is submitted that
it is sufficient if plaintiff proves, as it has, that various
divisions of Standard Bank, including defendant, gave out that they
were authorised to act for one another. ………”
I understood the bold
state submission quoted above to convey that any agency or company in
the Standard Bank Group of Companies will
be accountable because of
the impression created by one or more of the agencies in the Standard
Bank Group of Companies. The submission
negates the principle that
each company within a group is a separate legal entity (c.f.
REX
v MILNE AND ERLEIGH (7)
1951
(1) SA 791
(AD) 827 and
WAMBACH
v MAIZECOR INDUSTRIES (EDMS) BPK
[1993] ZASCA 28
;
1993 (2) SA 669
(AD) 675).
[12] In
NBS
BANK LTD v CAPE PRODUCE CO (PTY) LTD AND OTHERS
2002 (1) SA 396
(SCA) at 411 Schutz JA considered the requirements
for imputed authority based on estoppel thus:
“
[25] As
Denning MR points out, ostensible authority flows from the
appearances
of authority created by the principal. Actual authority may be
important, as it is in this case, in sketching the framework of the
image presented, but the overall impression received by the viewer
from the principal may be much more detailed. Our law has borrowed
an expression, estoppel, to describe a situation where a representor
may be held accountable when he has created an impression in
another’s mind, even though he may not have intended to do so and
even though the impression is in fact wrong. Where a principal
is
held liable because of the ostensible authority of an agent, agency
by estoppel is said to arise. But the law stresses that the
appearance, the representation, must have been created by the
principal himself. The fact that another holds himself out as his
agent cannot, of itself, impose liability on him. Thus, to take this
case, the fact that Assante held himself out as authorised
to act as
he did is by the way. What Cape Produce must establish is that the
NBS created the impression that he was entitled to
do so on its
behalf. This was much stressed in argument, and rightly so. And it
is not enough that an impression was in fact created
as a result of
the representation. It is also necessary that the representee should
have acted reasonably in forming that impression:
Connock’s
(SA) Motor Co Ltd v Sentraal Westelike Ko-operatiewe Maatskappy Bpk
1964 (2) SA 47
(T) at 50 A
– D. Although an intention to mislead is not a requirement of
estoppel, where such an intention is lacking and a course
of conduct
is relied on as constituting the representation, the conduct must be
of such a kind as could reasonably have been expected
by the person
responsible for it, to mislead. Regard is had to the position in
which he is placed and the knowledge he possesses.
A court will not
hold a person bound by consequences which he could not reasonably
expect and are therefore not the natural result
of his conduct:
Monzali v Smith
1929 AD 382
at 386,
Poort
Sugar Planters (Pty) Ltd v Minister of Lands
1963 (3) SA 352
(A) at 364 A – B.”
[26] What
Cape Produce therefore has to prove in order to establish Assante’s
ostensible authority is: 1. A representation by words
or
conduct.
2. Made by the NBS and not merely by
Assante, that he had the authority to act as he did.
3. A
representation in a form such that the NBS should reasonably have
expected that outsiders would act on the strength of it.
4. Reliance by Cape Produce on the
representation.
5. The
reasonableness of such reliance.
6. Consequent prejudice to Cape
Produce. (This last element is clearly present and requires no
further mention.)”
[12] What plaintiff had
to prove to establish Stanfin and/or Van Jaarsveldt authority to bind
defendant is:
(a) a representation by
words or conduct;
(b) made by defendant it
is Stanlid Ltd that Stanfin and/or Van Jaarsveldt had the authority
to conclude the concract;
(c) a representation in
the form such that it could reasonably have expected others would act
on the shrenk of that; and
(d) reliance by plaintiff
on representation;
(e) the
reasonable of such reliance;
(f) the
consequent prejudice to the plaintiff.
[13] The facts herein are
uncomplicated.
Lesotho National
Insurance Co (Pty) Ltd during 1995 decided to spread its investments,
as a result whereof quotations were called
for from Standard Bank.
Two or three people from Standard Bank Johannesburg together with one
Kaltenbrunn, a representative of Stanfin
in Ladybrand, attended a
meeting whilst LNIC was represented by the aforementioned Babu and
others including one Hepburne. This
discussion concluded with
Kaltenbrunn being tasked to deal with “quotations and things”.
Kaltenbrunn, labelling
himself as “Konsultant Nr. C1033 Standard Bank Finansiële
Dienste”, submitted at least two quotations
to LNIC to which
quotations were annexed a quotation by defendant addressed to
Kaltenbrunn. The wording of the annexure exhibits
“A1” and “A2”
were to a large extent similar.
The
investment in the amount of R10 miilion resulted and Kaltenbrunn
issued two certificates exhibits “A8” and “A9”.
During
1998 Van Jaarsveldt without appointment arrived at Babu’s office in
Maseru, handed him his business card and enquired about
the
possibility of investments with specific reference to the investment
which was made in 1995 and which was to mature in due course.
Babu, instructed by the
Chief Executive Officer of LNIH, called for and obtained quotations
from Syfrets Trust and First National
Bank and Van Jaarsveldt or
Stanfin for the investment of the amount which was to become
available on maturity.
Van Jaarsveldt, on behalf
of Stanfin, submitted various quotations culminating in the quotation
annexure “A” to the particulars
of claim. To the latter
quotation dated 17 June 1998 LNIH Ltd responded on 19 June 1998
annexure “B1” and Van Jaardsveldt replied
as per annexure “B2”.
[14] The evidence calls
for some comment.
(a) No evidence was
adduced to prove or suggest that the defendant represented Stanfin
and/or Van Jaarsveldt to be its authorised
agent; whatever Van
Jaarsveldt’s representations might have been same are in fact
immaterial.
(b) Correspondence from
defendant were on defendant’s letterheads clearly identifying
defendant as a separate legal entity;
(c) Assuming that
Kaltenbrunn was introduced as defendant’s agent by defendant’s
authorised representatives, and that the inference
that Kaltenbrunn
and thus Stanfin represented defendant, can be drawn, the evidence
clearly reveals that Van Jaarsveldt as representative
of Stanfin, was
not so introduced by defendant – he simply introduced himself
(d) The only conduct to
establish a nexus between defendant and Stanfin is the fact that
defendant accepted investments from LNIC
and perhaps LNIH through the
agency of Kaltenbrunn.
[15] Reference to the
fact that Van Jaarsveldt’s contact with plaintiff, through Babu,
was not by prior arrangement, in fact, Babu
testified that Van
Jaarsveldt “pitched up” and introduced himself
inter
alia
by
handing out his business card, was already made.
Van
Jaarsveld business card exhibit “A257” introduces him as
“’
Broker/Consultant’
Standard Bank Investment Services (Pty) Ltd.”
No reference to defendant
as legal entity can be found on the business card.
Fact is, that Babu, and
thus plaintiff, was alerted to the fact that Van Jaarsveldt was a
broker, it is an intermediary
“
who is not empowered to treat, but
to explain the intention of both parties and to negotiate and seek in
such a manner as to put those
to who employ him in a condition to
treat personally”
(per McGregor J quoting
Domat in
JACOBS
LEVITATZ AND BRAUDE v KROONSTAD ROLLER MILLS
1921 (OPD) 38 at 40 – 41).
[16] It follows that
plaintiff on the evidence adduced, did not prove that Van Jaarsveldt
or Stanfin was either actually or ostensibly
authorised by defendant
to enter into the contract contented for by plaintiff.
[17] In passing it must
be noted that whatever Babu’s own notions about Van Jaarsveldt’s
status and function might have been insofar
as same are not based on
fact or conduct by defendant can never serve as a basis for a
representation by defendant let alone a misrepresentation
by the
latter.
[18] No arguments
suggesting an order on cost different to the usual, was advanced.
Counsel were
ad
idem
that
costs should include the cost of two counsel.
[19] I make the following
order:
Absolution from the
instance with costs such costs to include the costs of two advocates.
_______________________
G. VAN COPPENHAGEN, J
On
behalf of plaintiff: Adv. H.P. Viljoen SC
Instructed
by:
Webbers
Attorneys
BLOEMFONTEIN
On behalf of
defendant: Adv. R.G.L. Stelzner
Instructed
by:
Werksmans
Attorneys
SANDTON
/sp