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[1988] ZASCA 104
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Southern Life Association Ltd. v Beyleveld NO (266/87) [1988] ZASCA 104; [1989] 1 All SA 390 (A) (22 September 1988)
CASE NO: 266/87
SUPREME COURT OF SOUTH AFRICA
APPELLATE DIVISION
In the appeal of:
THE SOUTHERN LIFE ASSOCIATION LIMITED
Appellant
and
LODEWYK CHRISTOFFEL VAN DEVENTER
BEYLEVELD N.O.
Respondent
CORAM: RABIE ACJ, JOUBERT, SMALBERGER, MILNE et EKSTEEN JJA
DATE OF HEARING: 23 August 1988 DATE OF JUDGMENT: 22 September 1988
JUDGMENT
MILNE JA/
2 MILNE JA:
The appellant is an insurance company. It
employed one Alfred van Zyl in its Cape Town branch. The respondent is the
executor of the
estate of the late Adeline Maud Easterbrook, to whom I shall
refer as Mrs Easterbrook. Mrs Easterbrook's son, Lionel Easterbrook
(whom I
shall call Easterbrook), is the sole heir in the estate.
The respondent sued
the appellant and Van Zyl, jointly and severally, the one paying the other to be
absolved, for damages in the
sum of R69,450. The claim was based on transactions
alleged to have occurred between Easterbrook, representing Mrs Easterbrook, and
Van Zyl, acting in the course and scope of his employment as a financial adviser
with the appellant. It was based upon an alleged
breach of warranty or
representation by Van Zyl that a particular investment by Mrs Easterbrook would
be "secured"; alternatively,
on a breach of an undertaking to ensure that the
investment would be secured.
3
Van Zyl did not defend the action, and the respondent took judgment by
default against him. It seems that Van Zyl did not pay any
part of the judgment
debt. The appellant defended the action against it. The trial Court awarded
damages against the appellant in
the sum of R63,000 with interest, the amount of
damages having been agreed in that sum. The judgment is reported in 1987(4) SA
238
(C). Leave to appeal was granted by the trial Court.
The factual
background is, to a large extent, common cause. Where it is not, I shall
indicate. Mrs Easterbrook was a widow who had
lived for many years in
Johannesburg. Her sister and her son lived in Cape Town. In 1983 Mrs
Easterbrook, who was then 82 years old,
sold her house in Johannesburg and moved
to Cape Town in order to be near her son and her sister. Her house appears to
have been
her sole asset, apart from "a small war pension". The sale of this
house realised a nett sum of R60,000 which she put into a bank
savings account.
In order to increase
4
her income, she asked Easterbrook to try to find a secure investment for
the R60,000 with a rate of return that would give her "a
reasonably good
living". In about November 1983, Easterbrook approached Van Zyl, whom he knew
previously, and asked him to find the
best investment of this kind that he could
for Mrs Easterbrook. At this time, Van Zyl was employed by the appellant company
and working
at its premises in Cape Town, and this approach by Easterbrook took
the form of a telephone call to Van Zyl at the appellant's premises.
Van Zyl
said that after Easterbrook's approach to him, he had been approached by one
Hambridge who had "an undisclosed client" who
wanted to borrow a sum of money in
the vicinity of R60,000, and who would secure the loan by way of a first
mortgage bond registered
over a property valued at R70,000. Van Zyl, so he says,
told Hambridge that "...if he could submit the first mortgage bond and title
deeds, which is normal practice, I can discuss the investment with Mr
5
Easterbrook." While Van Zyl was, in many respects, a patently unreliable
witness, there is no reason to doubt this particular piece
of evidence, since
there is a letter from Hambridge dated 1 February 1984 which confirms what Van
Zyl said in this regard. It is
not clear exactly when Hambridge approached Van
Zyl but, about six weeks after Easterbrook spoke to Van Zyl about his mother's
investment,
the latter telephoned Easterbrook and told him that he had the ideal
investment for Mrs Easterbrook (referring to the proposed loan
to Hambridge's
client). The money would, so Van Zyl said, be invested for one year at an
interest rate of 21%, tax free, payable
three monthly in advance. Easterbrook
said in evidence that he assumed that the money was to be invested with the
appellant company
(this is in dispute). After discussion with his mother,
Easterbrook told Van Zyl that, providing the investment was adequately secured,
his mother would make the investment which Van Zyl had recommended. On 1 March
1984 Van Zyl picked up Mrs
6 Easterbrook from her residential hotel in Cape
Town, and took her to the bank where she withdrew the R60,000 f rom her savings
account
in the form of a cheque payable to Hambridge which she handed to Van
Zyl. On that same day she received a cheque drawn by Hambridge
for R3,151 being
interest for the first quarter. Mrs Easterbrook's cheque for R60,000 was given
by Van Zyl to Hambridge, who lent
it to one Du Plessis who was, apparently,
Hambridge's "undisclosed client".
Easterbrook learnt, shortly afterwards,
that his mother's cheque had been paid to Hambridge. He said in evidence that he
was not worried
at all about the fact that the cheque was in favour of Hambridge
and not the appellant company because "...as far as I was concerned
it was an
investment in the Southern Life". (This is in dispute).
Although it is quite
apparent that both Van Zyl and Easterbrook intended the loan to be against the
security of a first mortgage bond,
Van Zyl had, unbeknown
7
to Easterbrook (or Mrs Easterbrook), yielded to pressure
from Hambridge, and agreed to obtain the R60,000 loan from
the Easterbrooks without a bond being registered, upon the
faith of a (valueless) assurance from Hambridge that "the
documents would
be on my desk the next day", and that
Hambridge would be personally
responsible for anything
"that might go wrong".
Easterbrook thereafter asked for "confirmation"
of the security of the investment and, in response, Van
Zyl gave
Easterbrook a copy of a letter dated 1 March 1984.
This letter is written on
the appellant company's
letterhead and it is signed by Van Zyl who subscribes
himself as
"financial adviser". The letter is addressed to
Hambridge and is headed "Mrs
A M Easterbrook: Investment".
The body of the letter reads as follows:
"Mrs A M Easterbrook has now invested R60 000,00 with you at 21% taxfree
interest for one year payable quarterly in advance. The Capital
is to be repaid
on 1st March 1985.
As Mrs Easterbrook has received her first interest cheque in cash, I would
appreciate it if further interest could be paid into her
savings account number
02.31242.029.8 R at the Trust Bank, Sea Point.
8 Please confirm with me or Mr
L A Easterbrook at telephone number 25-
1900.
Address all correspondence to me and I will ensure that Mr
Easterbrook receives copies.
For your reference Mr Easterbrook's address is 29 Firmount Road, Sea
Point.
Please ensure that copies of documentation reaches my office soonest and that
interest payments are made promptly."
Easterbrook said, although this was in dispute, that he
regarded this as
confirmation of the transaction, but he
nevertheless pressed Van Zyl for the
"actual authority".
This pressure resulted in a further letter being given
to
Easterbrook. This is a letter dated 10 May 1984. It was
written on the
appellant's letterhead and signed by Van Zyl
who on this occasion subscribed
himself as "Senior
Financial Adviser". It is addressed to Easterbrook
and
headed "Investment Mrs A Easterbrook". The body of the
letter reads as follows:
"Attached please find copy of fitle (
sic
) deed number T3214/1981.
The investment of R60 000,00 was in the above property deal of which the
original fitle (
sic
) deed is with the firm of attorneys as reflected. The
repayment of capital will take place on 1 March 1985 and during this period
interest of R3 150,00 is payable quarterly in advance.
If for any reaosn (
sic
) mom does not receive the above interest on
9
time I will expect an urgent call from you.
I will personally hand her the capital cheque at the end of this periodi
Hoping you find everything to your satisfaction."
Enclosed with that letter were the title deeds of certain property and,
according to Easterbrook, a power of attorney by Petrus Jacobus
du Plessis to
pass a bond to Adeline Maud Easterbrook in an amount of R60 000 for monies lent
and advanced. Easterbrook said that
he believed as a result of having received
this letter and the documents, that his mother's investment was secured. In
fact, leaving
aside the typing errors, the letter contains a prime example of
pure gibberish. It says "The investment of R60 000,00 was in the
above property
deal of which the original title deed is with the firm of attorneys as
reflected." When the letter was written the
writer, namely Van Zyl, knew
perfectly well that the investment was not, in any way, secured but he intended
Easterbrook to believe,
as he did, that it was secured. It is a thoroughly
disingenuous if not actually
10
fraudulent letter. . In actual fact, as already mentioned, the investment was
totally unsecured and, furthermore, it was not an investment
with the appellant
company, nor even with Hambridge. The money had, in fact, been invested with one
Du Plessis. It is equally clear
that it was a term of the contract made between
Easterbrook, acting on behalf of his mother, and Van Zyl that Mrs Easterbrook's
ínvestment
was to be secured. Van Zyl, who was called by the appellant
company at the trial as a witness, said in evidence that the investment
was to
be secured by a first mortgage bond, and that he told Mrs Easterbrook that it
was a safe investment and that it was "secure".
Van Zyl also admitted in
cross-examination, that he knew that the loan was totally unsecured and knew
that Easterbrook and Mrs Easterbrook
believed the loan to have been
adequately
11
secured (and that they did not even know of the existence of Du
Plessis).
Du Plessis's estate was provisionally sequestrated on 15 November
1984 and finally sequestrated on 16 January 1985, (and the estate
of Hambridge
had, apparently, also been sequestrated by the time of the trial). Apart from
the initial payment of interest of R3,151,
Mrs Easterbrook was never paid any
interest nor was she repaid any of her capital. A claim was, however, made in
the insolvent estate
of Du Plessis, and it is, presumably, on the basis of the
receipt of a dividend in the amount of R6,300, that the quantum of the
claim in
the action was reduced to the agreed figure of R63,000.
As it was part of the
contract between Mrs Easterbrook (represented by Easterbrook), and Van Zyl that
the loan was to be secured,
and it was never secured (nor could Van Zyl at any
time have believed it to be secured), it is clear that Van Zyl acted, at the
very
12
least, negligently in representing to Easterbrook and Mrs Easterbrook that
the repayment of the loan had been adequately secured.
This aspect of the case
has never seriously been in dispute. What is very much in dispute is, however,
whether in all the circumstances,
the appellant company is liable for the loss
suffered as a result of Van Zyl's conduct.
On the pleadings, the crucial
issues were, firstly, whether Van Zyl in his dealings with regard to this
investment was acting in the
course and scope of his employment with the
appellant company, and secondly, if he was not, whether the appellant company is
estopped
by its conduct from denying that he was.
The trial Judge said "It is essentially on the issue of first defendant's
alleged estoppel that the trial proceeded." It appears to
me that some effort
was made at the trial to establish that Van Zyl had actual authority to
represent the appellant in his transactions
with
13
Easterbrook, but on a proper reading of Van Zyl's letter of appointment
(which was the standard letter of appointment issued to all
employees falling
within Van Zyl's category), Van Zyl had, in fact, no authority other than to
sell insurance policies on behalf
of the appellant. Clause 8E of the Conditions
of Employment states specifically that "your authority to act for the Southern
is confined
to the terms and provisions of this letter of appointment. It is
understood that the Southern shall not in any way hold itself responsible
for,
or be bound by, any act done by you in excess of the authority conveyed
hereunder." It seems to me to be a necessary implication
from the matters that
are referred to in the letter, that Van Zyl's job was to sell life insurance
policies on behalf of the appellant
and nothing else. The learned trial Judge
was, therefore, correct in approaching the case on the basis that the crucial
question
was whether or not the estoppel pleaded had been established by the
respondent.
14
The replication raised the estoppel in the following terms:
"1.2 At all times material hereto the First Defendant permitted the Second
Defendant:
1.2.1
to conduct business as a
financial adviser;
1.2.2
to conduct such
business from premises openly identified as belonging to the First
Defendant;
1.2.3
to use stationery and
business cards of the First Defendant;
1.2.4 to
describe himself as a 'financial adviser' and/or
'senior financial adviser' on such stationery and business cards;
1.2.5 to conduct business with the deceased and her agent,
LIONEL
EASTERBROOK, from the aforesaid premises, in the aforesaid capacity and with the
use of such
stationery.
1.3
A true copy of the Second
Defendant's 'Southern' business card describing him as a 'financial adviser' is
annexed marked 'PRI' and
a true copy of a letter dated lOth May 1984 addressed
to the deceased's agent, LIONEL EASTERBROOK, on the First Defendant's letterhead
describing the Second Defendant as a 'senior financial adviser' is annexed
marked 'PR2'.
1.4
In permitting the Second
Defendant to act as aforesaid, the First Defendant, by its conduct, represented
that the Second Defendant
was a financial adviser or senior financial adviser in
its employ and that the Second Defendant acted in the course and scope of
such
employment when transacting business as he did with the deceased and/or her
agent as aforesaid.
In the alternative to
paragraph 1.4 above:
1.5 In permitting the Second Defendant to act as aforesaid, the
First
Defendant, by its conduct, enabled the Second Defendant
to represent to the
deceased and/or the said LIONEL EASTERBROOK
that at all material times he was
acting wïthin the course and
scope of his employment with the Fïrst
Defendant, and the
Second Defendant in fact represented to the deceased
and/or the
said LIONEL EASTERBROOK that he was acting within the course
15
and scope of his employment with the First Defendant at all material
times.
In the further alternative to paragraphs 1.4 and 1.5 above:
1.6
In permitting the Second
Defendant to act as aforesaid, the Fïrst Defendant thereby ostensibly
authorised the Second Defendant
to give financial advïce in the course and
scope of his employment with the First Defendant.
1.7
The deceased and the said EASTERBROOK in fact believed that the
Second Defendant was acting in the course and scope of his employment
with the
Fïrst Defendant at all material times, which belief was induced by the
factors described in paragraphs 1.2.1 to 1.2.5
above.
1.8
Had the deceased and/or the said EASTERBROOK not held the aforesaid
belief, neither of them would have conferred the mandate described
in paragraph
5 of the Particulars of the Pïaintiff's Claim on the Second Defendant nor
would they have invested the funds as
advised by the Second Defendant and as set
forth in paragraph 7 of the Particulars of the Pïaintiff's
Claim.
1.9
In the premises the Fïrst
Defendant is estopped from denying that at all material times hereto the Second
Defendant acted in
the course and scope of hïs employment with the
Fïrst Defendant."
At the pre-trial conference,
it was admitted by the appellant that Van Zyl was empowered by it to use a
business card bearing the
name, address and logo of the appellant describing him
as "financial adviser", and that the appellant permitted Van Zyl to use the
title "financial adviser" in his business dealings on the appellant's behalf
16
with members of the public. It is unnecessary to deal more fully with the
evidence on this issue, firstly, because the reported judgment
of the trial
Court (referred to above), clearly sets out the effect of the evidence and
secondly, because the appellant's counsel
conceded, at the outset, that the
appellant had, by its conduct in permitting hlm to use the card, held out that
Van Zyl was qualified
to give financial advice on behalf of the appellant, and
was employed by the appellant as a financial adviser. In my view this concession
was wisely made, and I entirely agree with the following remarks of the trial
Judge on p247B-E:
"Van Zyl was designated a 'financial adviser' by first defendant and allowed
to hold himself out as such. Whatever the private limitation
on Van Zyl's actual
authority may or may not have been, a principal in the position of first
defendant can hardly in my view, be
heard to complain if one of its employees
who, although the purpose of his employment is to effect policies of insurance,
is styled
and held out to the public as a financial adviser, gives financial
advice. What otherwise is the point of holding out an employee
as a financial
adviser? One appreciates that in the world of commerce there is a measure of
hyperbole in the titles and designations
given to employees, but there is a risk
inherent in this that a member of the public with whom the employer deals may
reasonably
take the style or designation at its face value and assume that, when
the employee acts in a manner which is consistent therewith,
he is doing so as
an employee and in the course and scope of his employment."
17
While persons accustomed to dealing with insurance companies would, probably,
infer no more from the words "financial adviser" on
the business card than that
the holder of the card was entitled to give financial advice on insurance
matters, it by no means follows
that this would be so in the case of the
financially unsophisticated or ignorant layman. Indeed, it is clear that many
life insurance
companies hold themselves out as employing "...life insurance
advisers (who) are able to offer a comprehensive financial advisory
service...".
Some of the evidence of Smorenberg, who was employed as agency manager of the
branch where Van Zyl was employed, amounts
to an admission that the insurance
industry, including the appellant, holds its representatives out as offering a
rather wider package
than simply selling life insurance, and offers the service
of advice not only with regard to the right insurance policy, but in more
general terms with regard to clients' finances.
18
That is, however, by no means conclusive of the matter. It was submitted by
appellant's counsel that (a) the term "financial adviser"
is too vague to found
an estoppel; alternatively (b) the conduct of Van Zyl relied upon did not
constitute the giving of financial
advice (and therefore, did not even fall
within Van Zyl's ostensible authority); in any event, (c) the respondent had not
established
that it was upon the faith of any holding out by the appellant that
Easterbrook or Mrs Easterbrook invested the R60.000, and further
alternatively
(d) that in any event, even if the holding out by appellant was an inducing
causê of the money having been lent,
the respondent had to prove that it
was the sole cause, and that it had failed to do so.
There is considerable substance in the appellant's first point. For a
representation to
19
constitute an estoppel it must be unambiguous.
Hartogh v National Bank
1907 TS 1092
at 1104. The words "financial" and "adviser" and the phrase
"financial adviser", are words of wide meaning. If a man is employed
as a
financial adviser by an insurance company, what would that normally embrace? The
answer would seem to be that it must, at least,
include the giving of financial
advice; but that phrase is not as unambiguous as one might think at first sight.
Does it mean advice
as to the financial planning of the "estate" of the client
of an insurance company - how to minimize the liability of the estate
for death
duties and other matters of that nature - or does it embrace advice on what
would be sound investments not merely in the
life insurance world but generally?
Could it be said, for example, to embrace advice on the share market? - and if
so, would it extend
to the giving of advice as to whether or not a particular
class of shares or even a particular share would be a sound investment?
Would
20
such advice have to be confined to shares quoted on the stock exchange? It is
by no means clear to me that when an insurance company
holds out its employee as
a financial adviser it is saying, in effect, "If my employee gives you negligent
advice about the stock
market I will be liable if, as a result of your taking
such advice, you suffer loss." Quite apart from this question, the problem
that
arises pertinently in this case, is whether it can be said that acting as a
financial adviser would also embrace conduct which
amounts to the implementation
of such advice. I suppose that it is conceivable that circumstances might arise
where the actual arranging
of a loan in the sense of drawing up and considering
the relevant documents, could constitute acting as a financial adviser, although
I am strongly inclined to think that, in the ordinary course of events, it would
not. If I am correct in this view, then the appellant
must succeed on the second
point, namely that the conduct of Van Zyl which is relied upon does not fall
21
within his ostensible authority. It has not been proved that at the time when
he advised Easterbrook that the investment he had found
for Mrs Easterbrook
would be "secured", he did not intend that it would be secured by means of a
first mortgage bond over the borrower's
property. If it is correct, that the
implementation of his advice was not something which fell within Van Zyl's
ostensible authority,
then his conduct in not ensuring the passing of the bond
after the money had been paid over does not fall within the ostensible authority
alleged. It is conceivable that a case could have been made on the following
lines:
(a) that by the time Mrs Easterbrook paid over the R60,000 Van Zyl knew that his
representation that the investment would be secured
(in the sense of being
secured before or simultaneously with the advance of the money), was no longer
true;
(b)
that Van Zyl's letters of 1 March and 10
May
22
1988, referred to above, lulled the Easteirbrooks
into a false sense of security and induced
them
to abstain from enquiring fully
into the question
of whether or not the investment was, in fact,
secured; and
(c) both such letters having been
written on the
appellant's letterhead and signed by Van Zyl as
financial adviser, a material cause of the
Easterbrooks' failure to enquire as aforesaid,
was the fact that the appellant held Van Zyl out
as a financial adviser employed by the appellant.
Cf S v Harper & Another
1981(2) SA 638(D) at
653B-655H.
That was, however, not the case pleaded by
the
respondent, which was that had the deceased and
Easterbrook
not held the belief that Van Zyl was acting in the course
and
scope of his employment with the appellant,
"...neither of them would have
conferred the mandate
described in paragraph 5 of the particulars of claim on
the
23
second defendant nor would they have invested the funds as advised by the
second defendant ...".
Quite apart from these problems, however, I am driven
to the conclusion that the respondent failed to prove, on a balance of
probabilities,
that it was the appellant's holding out that induced Easterbrook
to advise his mother to make the investment, or Mrs Easterbrook
to make the
investment.
It was the appellant's case that Easterbrook accepted Van Zyl's
advice and assurances, not because of any holding out by the appellant,
but
because of a previous association between the Easterbrooks and Van Zyl, in the
course of which the latter had given the Easterbrooks
advice, including advice
of a financial nature. The trial Court rejected this argument. The grounds upon
which it did so, appear
in the reported jddgment at p246E-J and 249D-G. In a
nutshell, the trial Judge's reasoning was that although the evidence established
a pre-existing
24
association between Easterbrook and Van Zyl, that was merely the reason why
he chose Van Zyl (and not some other parson fulfilling
the same role), when he
sought Van Zyl's advice as to his mother's investment. The trial Judge accepted
Easterbrook's evidence that
he would not have consulted Van Zyl about his
mother's investment but for the fact that he believed that Van Zyl was employed
as
a financial adviser by the appellant, and said that Easterbrook "...impressed
me as an honest man...". The trial Judge had the advantage
of seeing and hearing
the witnesses, and this Court will not lightly come to a different conclusion on
findings of credibility. Counsel
for the appellant, however, advanced a
formidable array of criticisms of Easterbrook's evidence. Many of them are
well-founded, and
taking their cumulative effect into account, I am of the view
that the learned Judge
a quo
should have held that the respondent had not
discharged the
onus
of proving that it was on the faith of the
appellant's
25
holding out that Easterbrook or Mrs Easterbrook acted as they did.
In the
first place, there is no doubt that Easterbrook, and, to a much lesser extent,
Mrs Easterbrook, did, over a period of years,
consult Van Zyl on a variety of
matters. Easterbrook and Van Zyl met each other during 1977 when Easterbrook was
a director at Indo
Jet Travel and Van Zyl was an insurance consultant at Indo
Atlantic Insurance Brokers. Indo Jet Travel was a wholly owned subsidiary
of
Indo Atlantic Insurance Brokers. Easterbrook suggested in his evidence that
while he was quite happy to consult Van Zyl on "insurance
matters", he would
only have consulted him on "investment matters" on the faith of the appellant's
representation that he was employed
by the appellant as a financial adviser. It
is quite clear, however, that several of the matters upon which Easterbrook
consulted
Van Zyl, when Van Zyl was still employed by Indo Atlantic, did not
relate
26
solely to insurance. The letters of 11 June and 14 December 1982 contain
advice relating to the position of Easterbrook's "estate".
Van Zyl also drew a
will for Mrs Easterbrook and she asked him to do something in relation to the
purchase of a house for her in
Cape Town.
Easterbrook further conceded that
"I went to Mr Van Zyl because.I knew him from past proceedings"; that as far as
he was concerned
Van Zyl had very well- rounded experience in financial matters
generally; that both he and his mother had the "utmost trust" in Van
Zyl; and
that Van Zyl was his financial confidante. A potent weapon was put into the
hands of the appellant when (in order to rebut
a suggestion of recent
fabrication), the statement prepared by his attorney was put in, and Easterbrook
confirmed that the statement
correctly reflected "what happened at the
consultation" between himself and hls attorney. This is a fairly lengthy
document and there
are certainly indications in it that Easterbrook intended to
hold the appellant
27
liable. In fact, it contains the statement by Easterbrook
that "as far as
I was concerned this investment fell under
the umbrella and financial backing of the Southern Life
Association for
whom Mr Van Zyl was the agent and financial
adviser." It also contains,
however, several passages that
strongly bear out the appellant's contention
that it was
Easterbrook's previous association with Van Zyl that
prompted
him to consult Van Zyl and to take his advice.
Paragraph 5 reads as follows:
"I decided to consult
with Mr Alfie van Zyl whom I first met when I was working for Indo Jet Travel
which was a wholly owned subsidiary
of Indo Atlantic Insurance Company where Mr
Van Zyl worked. I had previously consulted Mr Van Zyl about my personal
insurance arrangements
and the execution of my will and I at all times regarded
him as my financial advisor.
I had always had the utmost faith in Mr Van
Zyl's discretion and knowledee of financial business and it is for this reason
that I
trusted his advice in where my mother should invest her life savings
.
Mr Van Zyl advised me that he would research the 'investment market' and that he
would get back to me."
(My underlining)
The following passage is also significant: "I was
confident that Mr Van Zyl would procure sufficient security for the loan as I
had
always been impressed by his business acumen and competence as evidenced by
the various
28
plaques and awards which decorated his office and rêcorded his various
achievements as financial advisor". What is significant
is that there is no
reference to the business card and, indeed, it is suggested that it was the
various plaques and awards decorating
Van Zyl's office and recording his
achievements as a financial adviser, that gave Easterbrook his confidence in Van
Zyl. There is
no evidence that any of the "various plaques and awards" contained
any reference to the appellant or had been provided by the appellant.
There is a
further aspect of the matter which casts doubt on Easterbrook's credibility. He
persisted throughout his evidence in saying
that at all times he thought his
mother was investing with the appellant company. There are a number of factors
which make it difficult
to accept that he could possibly have thought this. When
Easterbrook approached Van Zyl about the investment for Mrs Easterbrook,
Van Zyl
said that he would "look around the investment market" and would come
29
back to Easterbrook; and, in fact, Van Zyl did not come back to him until
approximately six weeks' later. One would have thought that
if Mrs Easterbrook
had been investing with the appellant there would be no question of "looking
around" nor any reason for a delay
of six weeks. The cheque for R60,000 was made
out to Hambridge and not the appellant, and it was Hambridge's personal cheque
that
was received by Mrs Easterbrook as her first interest payment. This
directly contradicts Easterbrook's evidence that he thought that
the appellant
would pay the interest. Easterbrook was told by Van Zyl that he, Van Zyl, would
receive an amount of R300 as commission
from Hambridge: this is not capable of
any reasonable construction other than that Van Zyl was acting on behalf of
Hambridge and
not the appellant. The letter dated 1 March 1984 from Van Zyl to
Hambridge, of which a copy waá sent to Easterbrook, makes
it plain that
the investment was directly with Hambridge. Although it is plain that
Easterbrook had
30
discovered by July 1984 that the money had not been lent to Hambridge but to
Du Plessis (who had nothing whatever to do with the appellant),
and Easterbrook
knew by November 1984 that Du Plessis had been sequestrated, he made no
complaint to, or claim against, the appellant
until 9 January 1985. Furthermore,
when the attorneys actíng for Mrs Easterbrook wrote to the appellant
making the claim,
their letter recorded that Van Zyl had recommended to
Easterbrook as Mrs Easterbrook's agent "...that she place her funds with a
Mr H
C Hambridge...". The letter written on the same date to Hambridge by Mrs
Easterbrook's attorneys refers to the money having
been "loaned and advanced to
you". After the death of the deceased, the attorneys acting for the respondent
lodged a claim against
the insolvent estate of Du Plessis. All this indicates
that Easterbrook knew that he had a private deal with Van Zyl, and suggests
that
the claim against the appellant was something of an afterthought. Easterbrook's
attempted explanation of these
31
matters is not convincing. The extent to which he had
faith in Van Zyl is
demonstrated by the fact that in
February 1985, when it was quite apparent
that the loan had
not been secured and in fact the money had been lent to
Du
Plessis who had gone insolvent, Easterbrook still continued
to consult
Van Zyl about amendments to his will.
The learned trial Judge faced this problem
squarely
and dealt with it as follows (at p246I-J):
"Whatever terminology may or may not have been used in his statements by
Easterbrook to his attorney, in letters written on his behalf
and in his
evidence, it is clear to me that Easterbrook assumed that he was making an
investment which carried the
imprimatur
of first defendant which he knew
to be a respected and financially sound institution".
He later referred to Easterbrook's belief that the
investment was being
made "under the aegis" of the
appellant.
If Easterbrook had said that he believed that the
investment was being made under the protection of the
appellant he might
have been cross-examined as to what this
somewhat vague belief really meant, but his evidence might
32
have been more credible. That is not, however, what he said. He said, quite
unequivocally, in evidence, that he believed that his
mother had invested the
money with the appellant, that the appellant would repay her the money and that
the appellant would pay the
interest. For the reasons set out above he could not
have believed this to be the position, and the criticisms of his credibility
cannot be brushed aside.
It was submitted on behalf of the appellant that in
order to found an estoppel in our law "...it is not sufficient to prove that the
representation in question was
an
inducing cause of the representee
acting to his detriment, and that the respondent must indeed show that it was
the
inducing cause." For the respondent it was submitted that it is
sufficient if the representation in question is a material cause
of the
representee acting to his detriment. In this regard see the incisive comments of
Prof J C de Wet in his thesis "ESTOPPEL BY
REPRESENTATION"
33
IN DIE SUID-AFRIKAANSE REG at p31 and the article by Prof Kerr entitled
CAUSATION IN ESTOPPEL BY MISREPRESENTATION
1977 SALJ 270.
Compare also the
position in English Law as set out in SPENCER BOWER & TURNER: ESTOPPEL
BY
REPRESENTATION (3rd ed) pp104-110, in particular the
quotation of the
remarks of DIXON J in the Australian case
of
Grundt v The Great Boulder
(Pty) Gold Mines Ltd
[1937] HCA 58
;
(1938)
59 C.L.R. 641
(H.Ct. of Aust.) at p674-5 as
to the meaning
of "detriment". The conclusions I have come to,
however,
render it unnecessary to consider these
interesting
questions.
The appeal is allowed with costs including the
costs of two counsel, and the order of the Court
a quo
is
altered
to read as follows:
"Absolution from the instance with costs including the costs of two
counsel".
A J MILNE
Judge of Appeal
RABIE ACJ ] EKSTEEN JA ]