Makate v Vodacom (Pty) Ltd (CCT52/15) [2016] ZACC 13; 2016 (6) BCLR 709 (CC); 2016 (4) SA 121 (CC) (26 April 2016)

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[2016] ZACC 13
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Makate v Vodacom (Pty) Ltd (CCT52/15) [2016] ZACC 13; 2016 (6) BCLR 709 (CC); 2016 (4) SA 121 (CC) (26 April 2016)

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Heads of arguments

CONSTITUTIONAL
COURT OF SOUTH AFRICA
Case
CCT 52/15
In
the matter between:
KENNETH
NKOSANA
MAKATE
Applicant
and
VODACOM
(PTY)
LIMITED
Respondent
Neutral
citation:
Makate
v Vodacom (Pty) Ltd
[2016] ZACC 13
Coram:
Mogoeng CJ, Moseneke DCJ, Cameron J, Jafta J,
Khampepe J, Madlanga J, Matojane AJ, Nkabinde J, Van der Westhuizen
J, Wallis AJ and
Zondo J
Judgments:
Jafta J (majority): [1] to [107]
Wallis AJ
(concurring): [108] to [200]
Heard
on:
1 September 2015
Decided
on:
26 April 2016
Summary:
Contract — breach — oral
agreement to negotiate in good faith
Pleadings —
Ostensible authority — Distinct from estoppel — Not
necessary to plead ostensible authority in replication
Prescription Act 68
of 1969
—
Sections 10(1)
,
11
(d),
129
(d) — interpretation
of “debt”
Constitution —
Section 39(2) — Narrow interpretation of “debt” —
claim not prescribed
ORDER
On
appeal from the Supreme Court of Appeal (hearing an appeal from the
Gauteng Local Division of the High Court, Johannesburg):
1.
Leave to appeal is granted.
2.
The appeal is upheld.
3.
The order of the Gauteng Local Division of
the High Court, Johannesburg, is set aside and replaced with the
following order:
“
(a)
It is declared that Vodacom (Pty) Limited is bound by the agreement
concluded by Mr Kenneth Nkosana
Makate and Mr Philip Geissler.
(b)
Vodacom is ordered to commence negotiations in good faith with
Mr Kenneth Nkosana Makate
for determining a reasonable
compensation payable to him in terms of the agreement.
(c)
In the event of the parties failing to agree on the reasonable
compensation, the matter
must be submitted to Vodacom’s Chief
Executive Officer for determination of the amount within a reasonable
time.
(d)
Vodacom is ordered to pay the costs of the action, including the
costs of two counsel, if
applicable, and the costs of the expert,
Mr Zatkovich.”
4.
The negotiations mentioned in 3(b) must commence within 30 calendar
days from
the date of this order.
5.
Vodacom is ordered to pay the applicant’s costs in this Court
and in the
Supreme Court of Appeal, which include costs of two
counsel, where applicable
JUDGMENT
JAFTA
J (Mogoeng CJ, Moseneke DCJ, Khampepe J, Matojane AJ, Nkabinde J and
Zondo J concurring):
[1]
This application for leave to appeal is
about the enforcement of a contract concluded by the applicant and
the respondent’s
agent.  The case concerns payment of
compensation for the use of the applicant’s idea in developing
a lucrative product
which has generated billions of rands for the
respondent.  In resisting the claim, the respondent has raised a
number of defences,
two of which were upheld by the Gauteng Local
Division of the High Court, Johannesburg (trial Court).  These
were that the
agent had no authority to enter into the agreement and
that the applicant’s claim had prescribed.  Both the trial
Court
and the Supreme Court of Appeal refused to grant the applicant
leave to appeal, hence this application.
Factual
background
[2]
The applicant is Mr Kenneth Nkosana Makate,
a former employee of the respondent, Vodacom (Pty) Limited
(Vodacom).  During 2000
the applicant was employed by Vodacom as
a trainee accountant.  In November 2000 he was involved in a
long distance relationship
with a student who later became his wife.
They experienced communication difficulties, owing mainly to the fact
that his
girlfriend could not afford to buy airtime for purposes of
making telephone calls to him.  As a result the applicant was
the
one who initiated their telephone calls.
[3]
Both of them were familiar with the
practice in terms of which a cellphone user with low airtime would
dial the number of another
cellphone user and allow the cellphone to
ring twice before cancelling the call.  But for the message to
be conveyed the one
who initiated the call had to have some airtime
and therefore the practice did not resolve the couple’s
communication difficulty.
[4]
Meanwhile the applicant came up with an
idea in terms of which the cellphone user who has no airtime would be
able to send the request
to the other cellphone user who has airtime
to call the former.  The idea was reduced to writing and the
applicant consulted
his superior and mentor at Vodacom for advice on
how he could sell it to any of the cellphone service providers,
including Vodacom.
His mentor, Mr Lazarus Muchenje advised him
to speak to the Director of Product Development and Management, Mr
Philip Geissler.
[5]
The applicant and Mr Geissler negotiated
and agreed that Vodacom would use the applicant’s idea to
develop a new product which
would be put on trial for commercial
viability.  If the product was successful then the applicant
would be paid a share in
the revenue generated by it.  Although
the applicant had indicated that he wanted 15% of the revenue, the
parties deferred
their negotiations on the amount to be paid to the
applicant for a later date.  However, they agreed that in the
event of
them failing to agree on the amount, Vodacom’s Chief
Executive Officer (CEO) would determine the amount.
[6]
Based on the applicant’s idea Vodacom
developed a new product which was called, “Please Call Me”.
This product
enabled a cellphone user with no airtime to send a
message to the other cellphone user, asking her to call him.
The new product
elicited excitement at Vodacom and the inventor of
the idea on which it was built was praised for his innovative
thinking.
Vodacom’s internal newsletter described the
applicant’s idea in these terms:
“
Vodacom
has launched a new product called ‘Call Me’, thanks to
Kenneth Makate from our finance department.  Kenneth
suggested
the service to the product development team, which immediately took
up the idea.  ‘Call Me’ is a world
first and allows
Vodago prepaid users to send a free text message to other Vodacom
customers requesting that they call them back.
The main aim of
this product is to allow Vodacom users who do not have balances on
their accounts to keep in touch with their families
and loved ones.”
[7]
The newsletter did not only exude
excitement about the new product which was regarded by Vodacom to be
the first of its kind in
the whole world but also declared its
success.  In this regard the newsletter stated:
“‘
Call
Me’ has been a big success.  On the first day of operation
about 140 000 customers made use of the service.
It will
be free until December 31 this year and thereafter cost users 15
cents per transaction.”
[8]
In the same newsletter, the Managing
Director of Vodacom, Mr Mthembu, heaped praises on the applicant for
his idea.  He said:
“
Most
impressive to me was the fact that the idea of the product came from
one of our staff members whose job is not in any way related
to
product development.  This led me to ask myself one question:
what would happen in this company if we were all to come
up with
workable solutions to our company’s problems like Kenneth did?”
[9]
As stated in the newsletter the service was
offered for free for a limited period from the date of its launch.
Later Vodacom
charged for it.  Despite the fee charged the
“Please Call Me” was an instant hit with customers and
raked in a
lot of money for Vodacom.  It is common cause that
this product has generated revenue amounting to billions of rands.
[10]
As it was customary within Vodacom to make
and implement business decisions before they received the approval of
the board, the
“Please Call Me” product was also launched
before Vodacom’s Board approved it on 15 March 2001.
[11]
Despite the product being a success,
Vodacom did not negotiate compensation for the use of the applicant’s
idea.  Instead,
as the High Court later held,
Messrs Knott-Craig, Vodacom’s CEO, and Geissler created a
false narrative pertaining to
the origin of the idea on which the
“Please Call Me” product was based.  They
dishonestly credited Mr Knott-Craig
with the idea and this lie
was perpetuated in the latter’s autobiography.  When the
media queried the correctness of
the story, Mr Knott-Craig
solicited confirmation from Mr Geissler who was on holiday in
Mauritius.  Mr Geissler
responded by email on 25 December
2009 in which he said:
“
As
discussed, I read your latest book and agree, in principle with the
way Please Call Me was created on the fourth floor outside
your
office with two of Vodacom’s security guards playing a role of
the two ‘prepaid’ users without any credit
on their
phones – communicating with each other.
The
concept of ‘Call Me’ refined inside your office minutes
later and launched officially in late January 2001.
I
hope this helps with the media queries.”
[12]
Mr Geissler’s email contradicted his
earlier email of 9 February 2001 which was addressed to staff at
Vodacom, informing
them about the launch of the “Please Call
Me” product.  That email reads:
“
Dear
All Vodacom Staff, Vodacom is launching a new product this weekend
(Sunday Times) which will hopefully stimulate all traffic
on the
network as well as assist some of our subscribers who do not have
balances on their Vodago accounts to be able to communicate
with
friends and family.  This service is free until the end of the
year and then will go to 15c per transaction.  Kenneth
Makate
from our Finance Department came up with this idea a few months ago
and brought it to the Product Development Division.
We wish to
thank Kenneth for bringing his idea to our attention.”
[13]
The fact that the applicant was the
inventor of the idea was further acknowledged in Vodacom’s
newsletter that was published
in March 2001.  Its contents were
quoted earlier in which even the Managing Director of Vodacom praised
the applicant for
his idea.  Despite these facts, Messrs
Knott-Craig and Geissler later claimed that it was the CEO’s
idea.  This
untrue story appears to have been part of a
stratagem to deny the applicant compensation for the idea.
Vodacom first accused
him of having stolen the idea from MTN, its
competitor.
Litigati
o
n
History
[14]
Approximately
two and a half years after the launch of the product, the applicant
left
Vodacom’s employ.  He instituted action to enforce his
agreement with Vodacom in the High Court in 2008, some four
years
after the launch of the “Please Call Me” product.
He sought an order directing Vodacom to comply with its
obligations
under the parties’ oral agreement.
[1]
In the alternative the applicant sought the development of the common
law in terms of section 39(2) of the Constitution and
to infuse it
with constitutional values of ubuntu and good faith.  Flowing
from the alternative claim, the applicant sought
an order directing
Vodacom to enter into good faith negotiations with him, to determine
a reasonable remuneration payable to the
applicant for the use of his
idea in developing the “Please Call Me” service.
[15]
Vodacom
responded by filing two special pleas and raising a number of
defences.  The first asserted that the applicant’s
claim
had prescribed in terms of
section 11(d)
of the
Prescription Act.
[2
]
The second contended that in terms of the applicant’s
employment contract, the idea in question was Vodacom’s

property for which the applicant was not entitled to compensation.
[16]
In
the main plea, Vodacom disputed the existence of the agreement on
which the applicant relied.  Furthermore, the authority
of
Messrs Muchenje and Geissler to conclude the agreement on behalf of
Vodacom was placed in issue.  Vodacom asserted that
both of them
did not have actual or ostensible authority to enter into the
agreement on its behalf.
[3]
[17]
At the trial the applicant testified in
support of his claim and also called Mr Muchenje and an American
computer science and
telecommunications expert, as witnesses.
Vodacom led the evidence of Mr Knott-Craig only.  For reasons
that were not
explained to the trial Court, Vodacom did not call Mr
Geissler who received the applicant’s business idea and caused
it to
be developed into a lucrative service for Vodacom.  Nor
did it call Mr Mthembu, its Managing Director, who applauded the

applicant for this innovative idea.
[18]
Following
a detailed analysis of the evidence the trial Court furnished
extensive reasons for accepting the applicant’s evidence
and
that of his witnesses.  The trial Court was impressed by the
American expert and Mr Muchenje as witnesses.  The Court

described Mr Muchenje as “an honest witness who came to relate
what he personally knew about the matter”.
[4]
The Court held that the differences between his evidence and that of
the applicant were not material and concluded that Mr Muchenje’s

testimony was consistent with the general probabilities.  The
Court also noted that Mr Muchenje had consulted with Vodacom’s

lawyers before he was called to testify on the applicant’s
behalf.
[5]
The trial Court observed further that Mr Muchenje remained calm
and collected, despite the “lengthy, searching
and gruelling
cross-examination” he was subjected to by a “highly
skilled and very experienced counsel” for Vodacom.
[19]
With
regard to the applicant, the trial Court found that he gave his
evidence in a “reasonable manner”, in spite of
the
lengthy and skilful cross-examination.  The Court noted that the
applicant’s version was corroborated in material
respects by
the contents of the newsletter and the emails that came from Mr
Geissler.  The Court also took into account that
the applicant’s
testimony on the existence of the agreement stood uncontroverted,
despite Mr Geissler’s availability.
From Vodacom’s
failure to call Mr Geissler, the trial Court drew the inference
that he was not able to deny the version
furnished by the applicant
and Mr Muchenje.
[6]
[20]
But Mr Knott-Craig performed dismally as a
witness.  The trial Court found no difficulty in rejecting his
evidence.  The
Court’s analysis of his evidence was
rightly scathing.  He was willing to lie about matters which
were documented in
the records of Vodacom.  For example, he
arrogated to himself, in his autobiography, the idea on which the
“Please Call
Me” service was based, despite the fact that
in February 2001 Mr Geissler had sent out an email to all
members of staff,
informing them about the launch of the service and
acknowledging the applicant as the author of the idea.  This
acknowledgement
was repeated in the newsletter of March 2001 by
Vodacom’s Managing Director.  In this regard the trial
Court found that
it was likely that Mr Knott-Craig was familiar
with that newsletter because he also contributed an article to it.
[21]
When
the media queried the correctness of the assertion that Mr
Knott-Craig was the source of the idea, he went a step further to

find a willing participant, in Mr Geissler, to perpetuate the
lie.  He sought and obtained from Mr Geissler a written

untruthful confirmation that the idea was that of Mr Knott-Craig.
This Mr Geissler did despite the contents of his earlier
email of
February 2001 which was addressed to all employees of Vodacom in
which the applicant was declared the author of the idea.

Indeed, the trial Court’s inference that Mr Geissler’s
credibility was compromised was fully justified.  That
Court
described the explanation furnished by Mr Knott-Craig for the
contradiction on the origin of the idea, as nonsensical.
On the
contrary, the trial Court found that Mr Knott-Craig knew the
true version of how the “Please Call Me” service

originated.
[7]
[22]
Having rejected Mr Knott-Craig’s
testimony for a number of reasons, the trial Court held that,
for unexplained reasons,
both Mr Knott-Craig and Mr Geissler sought
to “write the plaintiff out of the ‘Please Call Me’
script for financial
and other reasons”.  The Court
concluded that the applicant had established the agreement concluded
by him and Mr Geissler.
[23]
The conclusion that the agreement had been
established drove the trial Court to determining whether Vodacom was
bound by that agreement.
This enquiry became necessary in the
light of Vodacom’s assertion that Mr Geissler had no authority
to conclude the agreement
on Vodacom’s behalf.  The trial
Court commenced by directing its focus to the pleadings and analysed
them with the view
to determine whether the applicant had properly
pleaded ostensible authority.
[24]
With
reference to
Amler’s
Precedents of Pleadings
,
[8]
the trial Court held that the applicant must have pleaded ostensible
authority in replication.  The Court regarded as insufficient

the allegation in the applicant’s particulars to the effect
that Mr Geissler had ostensible authority.  But, the Court

proceeded to hold that on the evidence placed on record, the
applicant had failed to show a representation by Vodacom itself,
giving rise to an impression that Mr Geissler had authority to
conclude the agreement on its behalf.
[9]
[25]
The
last issue to receive the attention of the trial Court was whether
the applicant’s claim had prescribed.  The trial
Court
held that under the
Prescription Act, what
prescribes is a “debt”.
With reference to
section 10(1
), read with
section 11(d)
,
12
(1) and
12
(3) of that Act, the word “debt” was given a
wide meaning which included a claim to pay the applicant a share of
the
revenue and the obligation to negotiate a reasonable compensation
for the use of the applicant’s idea.
[10]
For the wide meaning assigned to “debt”, the trial Court
relied on
Desai
[11]
and
LTA
Construction
.
[12]
[26]
Having concluded that the applicant’s
claim constituted a debt contemplated in the relevant provisions of
the
Prescription Act, the
trial Court held that the claim had
prescribed because the action was instituted after a period of more
than three years had lapsed,
from the date on which the debt arose.
The Court found that the claim arose in November 2000 and that the
summons was served
on Vodacom on 14 July 2005.
[27]
In view of its conclusions on ostensible
authority and prescription, the trial Court did not consider it
necessary to express
any view on the other issues.  These
included the request for the development of the common law in terms
of section 39(2)
of the Constitution and the competence of the
relief sought.  Consequently the applicant’s claim was
dismissed with
costs.
[28]
The trial Court refused to grant leave to
appeal and the subsequent approach to the Supreme Court of Appeal was
also unsuccessful.
The applicant has now turned to this Court
for leave to appeal.
In
this Court
[29]
For
the applicant to obtain leave, he must show that this Court has
jurisdiction to entertain the matter and additionally that it
is in
the interests of justice to grant him leave to appeal.  It
cannot be gainsaid that this matter raises a constitutional
issue
located in section 39(2) of the Constitution.
[13]
In the pleadings before the High Court, the applicant asked for the
development of the common law of contract to infuse it
with
constitutional values such as ubuntu and good faith.  In this
Court the applicant took a step further and requested that
section
39(2) be invoked when this Court construes the relevant provisions of
the
Prescription Act.  He
contended that the Act limits his
right of access to court by declaring that his claim has prescribed.
In these circumstances,
it is not necessary to consider whether the
matter also raises an arguable point of law of general public
importance.
[30]
Instead,
what needs to be determined is whether the interests of justice
favour the granting of leave.  This case presents
an opportunity
to this Court to interpret the
Prescription Act in
accordance with
section 39(2).
The High Court grounded its construction of the
relevant provisions on an interpretation of the pre-Constitution
authorities.
[14]
Section 39(2)
introduced an approach to statutory interpretation,
different to the one followed under the doctrine of supremacy of
Parliament.
Moreover, there are prospects of success on the
issues decided by the High Court in favour of Vodacom.
Therefore, leave must
be granted.
Issues
[31]
Two main issues arise here.  The first
is whether the ostensible authority relied on by the applicant was
established.
In view of the High Court’s approach, two
subsidiary questions also occur.  These are whether ostensible
authority was
properly pleaded and whether the common law ought to be
developed in present circumstances.
[32]
The second main issue is whether the
applicant’s claim had prescribed.  The determination of
this issue involves the
proper interpretation of
section 10(1)
of the
Prescription Act read
with
sections 11(d)
,
12
(1) and
12
(3).  If
it is true that the application of those provisions limited the
applicant’s right of access to court, then their
interpretation
must accord with section 39(2) of the Constitution.  This
interpretive approach will in turn require us to
reassess the
construction that was assigned to the
Prescription Act under
the era
of the supremacy of Parliament because now the Constitution is the
supreme law.  All laws, including the common law
of
interpretation, derive their validity from the Constitution.  I
address these issues in turn but before doing so I must
quickly
dispose of an additional issue raised by Vodacom.
Was
the agreement proved?
[33]
Vodacom argued that the applicant has
failed to establish the existence of the agreement on which his claim
was based.  It
submitted that his evidence on the terms of the
agreement was not consistent and that the trial Court accepted that
the applicant
confronted difficulties in relation to certain areas of
his testimony.
[34]
Indeed in paragraph 76 of the judgment,
having held that the applicant’s version was corroborated by Mr
Geissler’s emails
and was also consistent with probabilities,
the trial Court identified two areas of difficulty:
“
In
addition, the e-mails that came from Mr Geissler to others, including
the plaintiff and Mr Muchenje, concerning the plaintiff’s
idea
and the ‘
Please
Call Me
’
product, provides further vital corroboration of material aspects of
the plaintiff’s version.  The plaintiff’s
version is
also consistent with the general probabilities and the probabilities
arising from the common cause facts.  Areas
of the plaintiff’s
evidence where he confronted difficulty related, in particular, to
his version that Mr Geissler had agreed
with him that he would be
remunerated for the use of his idea if it proved to be feasible
technically and from a business perspective;
and that he had,
concerning remuneration, proposed to Mr Geissler a 15% share of the
revenue (profit) derived from the product
developed from his idea and
that Mr Geissler had agreed that in the event of them not being able
to fix a figure between themselves,
Mr Knott-Craig, in his
capacity as Chief Executive Officer of the defendant, would determine
the figure.  However, the
emails confirm the involvement of . .
. Mr Geissler in the issue of remuneration.  Another area
of difficulty for the
plaintiff, was the alleged inconsistency
between his version in court regarding the terms of the agreement he
concluded with Mr
Geissler and the correspondence sent by him, or on
his behalf, before this action was instituted against the defendant.”
[35]
The
High Court proceeded to give a number of reasons for accepting the
applicant’s evidence pertaining to the remuneration
term.
The first one was that in an email sent to the applicant, Mr Geissler
had stated that he would be discussing the issue
of remuneration with
Mr Knott-Craig.
[15]
Second, despite vigorous cross examination, the applicant
“consistently maintained his version”.  Third,
the
applicant’s evidence that he wanted to be paid for his idea was
corroborated by Mr Muchenje whom the Court found
to be an
impressive witness.  Added to these reasons was Vodacom’s
failure to call Mr Geissler and the fact that the
applicant’s
testimony on the terms of the agreement stood uncontroverted.
[36]
If anything, this reasoning shows that the
trial Court was alive to the shortcomings in the applicant’s
evidence, which were
properly assessed.  For the reasons already
stated, the Court did not consider those shortcomings to be of the
nature that
warranted the rejection of the applicant’s evidence
which it had found to have been consistent with the probabilities.
[37]
In
these circumstances, interference with the factual findings made by
the trial Court is neither necessary nor justified.

Ordinarily appeal courts in our law are reluctant to interfere with
factual findings made by trial courts, more particularly if
the
factual findings depended upon the credibility of the witnesses who
testified at the trial.
[16]
In
Bitcon
,
Wessels CJ said:
“
[T]he
trial judge is not concerned with what is or is not probable when
dealing with abstract business men or normal men, but is
concerned
with what is probable and what is not probable as regards the
particular individuals situated in the particular circumstances
in
which they were.”
[17]
[38]
In our system, as in many similar systems
of appeal, the cold record placed before the appeal court does not
capture all that occurred
at the trial.  The disadvantage is
that the appeal court is denied the opportunity of observing
witnesses testify and drawing
its own inferences from their demeanour
and body language.  On the contrary, this is the advantage
enjoyed by every trial
court.  Hence an appeal court must defer
to the trial court when it comes to factual findings.  In
Powell
&
Wife
, Lord
Wright formulated the principle thus:
“
Not
to have seen the witnesses puts appellate judges in a permanent
position of disadvantage as against the trial judges, and, unless
it
can be shown that he has failed to use or has palpably misused his
advantage, the higher court ought not to take the responsibility
of
reversing conclusions so arrived at, merely on the result of their
own comparisons and criticisms of the witnesses and of their
own view
of the probabilities of the case.”
[18]
[39]
Moreover, this being the highest Court in
the Republic which is charged with upholding the Constitution, and
deciding points of
law of general public importance, this Court must
not be saddled with the responsibility of resolving factual disputes
where disputes
of that kind have been determined by lower courts.
Deciding factual disputes is ordinarily not the role of apex courts.

Ordinarily an apex court declares the law that must be followed and
applied by the other courts.  Factual disputes must be

determined by the lower courts and when cases come to this Court on
appeal, they are adjudicated on the facts as found by the lower

courts. Of course, this principle does not apply to matters that come
directly to this Court.
[40]
But even in the appeal, the deference
afforded to a trial court’s credibility findings must not be
overstated.  If it
emerges from the record that the trial court
misdirected itself on the facts or that it came to a wrong
conclusion, the appellate
court is duty-bound to overrule factual
findings of the trial court so as to do justice to the case.  In
Bernert
this Court affirmed:
“
What
must be stressed here, is the point that has been repeatedly made.
The principle that an appellate court will not ordinarily
interfere
with a factual finding by a trial court is not an inflexible rule.
It is a recognition of the advantages that the
trial court enjoys
which the appellate court does not.  These advantages flow from
observing and hearing witnesses as opposed
to reading ‘the cold
printed word’.  The main advantage being the opportunity
to observe the demeanour of the
witnesses.  But this rule of
practice should not be used to ‘tie the hands of appellate
courts’.  It should
be used to assist, and not to hamper,
an appellate court to do justice to the case before it.  Thus,
where there is a misdirection
on the facts by the trial court, the
appellate court is entitled to disregard the findings on facts and
come to its own conclusion
on the facts as they appear on the
record.  Similarly, where the appellate court is convinced that
the conclusion reached
by the trial court is clearly wrong, it will
reverse it.”
[19]
[41]
Here there was no misdirection and the
trial Court did not reach a wrong conclusion.  On the contrary,
it comprehensively analysed
the evidence and set out compelling
reasons for accepting evidence led by the applicant and rejecting
that of the respondent.
Consequently, we must approach this
matter on the footing that the existence of an agreement between the
applicant and Mr Geissler
was established.
Was
ostensible authority pleaded?
[42]
In
the High Court, Vodacom argued that the applicant could not rely on
ostensible authority because he had failed to plead it in

replication.  Relying on
Amler
,
[20]
it was submitted that for a party to invoke estoppel, it must plead
it in replication because it does not serve as a basis for
a claim
but that it amounts to a shield.  The applicant sought to
counter this argument by pointing to the fact that his particulars
of
claim alleged that Mr Geissler had ostensible authority to negotiate
and conclude the agreement on behalf of Vodacom.
[21]
[43]
In upholding Vodacom’s argument, the
trial Court stated:
“
The
mere allegation in the particulars of claim, that Mr Geissler has
‘ostensible authority’, was not enough.
The
plaintiff had to plead an estoppel in replication.  If the
plaintiff was aware at the outset of the true facts, namely,
that
there was no actual authority and that he was relying on ostensible
authority, he should have pleaded the facts, as represented
to him,
to found such authority, in his particulars of claim.  If he was
not aware that Mr Geissler had no actual authority
and had pleaded
actual authority and the defendant had, in turn, pleaded the true
facts (i.e. a denial of actual authority), the
plaintiff may then
have relied on estoppel in his replication.  But it was
essential for the plaintiff to have pleaded the
facts as represented
to him, if he was aware of those facts.  The estoppel, which is
not a cause of action, should then have
been pleaded in a
replication, in response to the defendant’s plea.”
(Footnote omitted.)
[44]
The
High Court’s conclusion on this aspect was based on flawed
reasoning.  That Court proceeded from the premise that
the
applicant raised the issue of estoppel and since estoppel is put up
as a shield, it can only be pleaded in replication.
By so
doing, the trial Court moved from the footing  that conflated
ostensible authority with estoppel.  Although ostensible

authority and estoppel have at times been treated synonymously by our
courts, they are not one and the same thing.
[22]
[45]
Actual
authority and ostensible or apparent authority are the opposite sides
of the same coin.  If an agent wishes to perform
a juristic act
on behalf of a principal, the agent requires authority to do so, for
the act to bind the principal.  If the
principal had conferred
the necessary authority either expressly or impliedly, the agent is
taken to have actual authority.
[23]
But if the principal were to deny that she had conferred the
authority, the third party who concluded the juristic act with
the
agent may plead estoppel in replication.  In this context,
estoppel is not a form of authority but a rule to the effect
that if
the principal had conducted herself in a manner that misled the third
party into believing that the agent has authority,
the principal is
precluded from denying that the agent had authority.
[46]
The same misrepresentation may also lead to
an appearance that the agent has the power to act on behalf of the
principal.  This
is known as ostensible or apparent authority in
our law.  While this kind of authority may not have been
conferred by the
principal, it is still taken to be the authority of
the agent as it appears to others.  It is distinguishable from
estoppel
which is not authority at all.  Moreover, estoppel and
apparent authority have different elements, barring one that is
common
to both.  The common element is the representation which
may take the form of words or conduct.
[47]
A
closer examination of the original statement on apparent authority by
Lord Denning, quoted below, reveals that the presence
of
authority is established if it is shown that a principal by words or
conduct has created an appearance that the agent has the
power to act
on its behalf.  Nothing more is required.  The means by
which that appearance is represented need not be
directed at any
person.  In other words the principal need not make the
representation to the person claiming that the agent
had apparent
authority.  The statement indicates the absence of the elements
of estoppel.  It does not mention prejudice
at all.  That
statement of English law was imported as it is into our law in
NBS
Bank
and other cases that followed it.
[24]
[48]
In the leading case of
Hely-Hutchinson
CA
,
Lord
Denning MR explained the concepts of actual and apparent authority as
follows:
“
[A]ctual
authority may be express or implied.  It is express when it is
given by express words, such as when a board of directors
pass a
resolution which authorises two of their number to sign cheques.
It is implied when it is inferred from the conduct
of the parties and
the circumstances of the case, such as when the board of directors
appoint one of their number to be managing
director.  They
thereby impliedly authorise him to do all such things as fall within
the usual scope of that office.
Actual authority, express or
implied, is binding as between the company and the agent, and also as
between the company and others,
whether they are within the company
or outside it.
Ostensible
or apparent authority is the authority of an agent as it appears to
others.
It often coincides with actual authority.  Thus, when the board
appoint one of their number to be managing director,
they invest him
not only with implied authority, but also with ostensible authority
to do all such things as fall within the usual
scope of that office.
Other people who see him acting as managing director are entitled to
assume that he has the usual authority
of a managing director.
But sometimes ostensible authority exceeds actual authority.
For instance, when the board appoint
the managing director, they may
expressly limit his authority by saying he is not to order goods
worth more than £500 without
the sanction of the board.
In that case his actual authority is subject to the £500
limitation, but his ostensible
authority includes all the usual
authority of a managing director.  The company is bound by his
ostensible authority in his
dealings with those who do not know of
the limitation.  He may himself do the ‘holding-out’.
Thus, if he
orders goods worth £1,000 and signs himself
‘Managing Director for and on behalf of the company,’ the
company
is bound to the other party who does not know of the £500
limitation, see
British
Thomson-Houston Co Ltd v Federated European Bank Ltd,
which was quoted for this purpose by Pearson LJ in
Freeman
& Lockyer
.
Even
if the other party happens himself to be a director of the company,
nevertheless the company may be bound by the ostensible
authority.
Suppose the managing director orders £1,000 worth of goods from
a new director who has just joined the company and
does not know of
the £500 limitation, not having studied the minute book, the
company may yet be bound.  Lord Simonds
in
Morris
v Kanssen
,
envisaged
that sort of case, which was considered by Roskill J in the present
case.
”
[25]
(Footnotes omitted and emphasis added.)
[49]
It is significant to note that in the
statement, Lord Denning stressed that: “Ostensible or apparent
authority is the authority
of an agent as it appears to others”.
This underscores the distinction between it and estoppel.  The
features
of estoppel make this distinction even more noticeable.
The essential elements of estoppel in the field of agency are the

following:
(a)
a
representation made in words or by conduct, including silence or
inaction;
[26]
(b)
the
representation must have been made by the principal to the person who
raises estoppel (the representee);
[27]
(c)
the
principal must reasonably have expected that her conduct may mislead
the representee;
[28]
and
(d)
the representee must reasonably have acted
on the representation to his own prejudice.
[50]
But our courts have sometimes conflated
apparent authority with estoppel and this resulted in attributing the
elements of estoppel
to apparent authority.  Without any
substantiation, the Supreme Court of Appeal treated them as one in
NBS Bank
.
In that case, having quoted the statement above, Schutz JA
said:
“
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.”
[29]
(Reference omitted and emphasis added.)
[51]
In the next paragraph, the learned Judge
proceeded to state the features of estoppel as elements of apparent
authority.  His
words were:
“
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).”
[30]
[52]
Notably it appears from the emphasised
sentence and what was listed by the learned Judge as elements of
apparent authority that
he simply conflated ostensible authority with
estoppel.  In doing so he overlooked that the statement taken
from
Hely-Hutchinson CA
underscored that apparent authority is the agent’s authority as
it appears to others.  It bears repeating that estoppel
is not a
form of authority.  Not even by appearance.  Furthermore,
in the emphasised words, when defining estoppel, the
learned Judge
proceeded to state that estoppel describes a situation where a
representor may be held accountable if he had created
an impression,
“even though he may not have intended to do so and even though
the impression is in fact wrong”.
These words are in
conflict with one of the essential elements of estoppel to the effect
that the principal must have expected
that the other party would act
on the strength of his representation.  He cannot have this
expectation if in the first place
he did not intend to create the
impression.  This is illogical.
[53]
Moreover, in the statement there is nothing
that suggests that apparent authority may be equated to estoppel.
Instead the
converse appears to be true.  In addition, with
regard to the elements that the learned Judge had attributed to
ostensible
authority, the oddity is that the principal must
reasonably have expected outsiders to act on the strength of the
representation.
This contradicts the plain words of Lord
Denning who said:
“
Even
if the other party happens himself to be a director of the company,
nevertheless the company may be bound by the ostensible
authority.
Suppose the managing director orders £1,000 worth of goods from
a new director who does not know of the
£500 limitation, not
having studied the minute book, the company may yet be bound.”
(Footnote omitted.)
Therefore,
it is clear that, even if the representee is not an outsider, under
apparent authority the principal could still be bound.
[54]
The conflation of estoppel and apparent
authority continued in
South African
Broadcasting Corporation
.  There
the Supreme Court of Appeal declared:
“
The
plaintiffs in a replication relied on estoppel, otherwise described
as ostensible authority. A person who has not authorised
another to
conclude a juristic act on his or her behalf may in appropriate
circumstances be estopped from denying that he or she
had authorised
the other so to act. The effect of a successful reliance on estoppel
is that the person who has been estopped is
liable as though he or
she had authorised the other to act.”
[31]
(Footnote omitted.)
[55]
The conflation in
NBS
Bank
also led to a less than
satisfactory enquiry into whether apparent authority was established.
The Supreme Court of Appeal
had to apply the test for
determining whether estoppel was proved.  In doing so, the Court
unnecessarily got entangled in
the elements of estoppel.  With
regard to the question whether the plaintiffs were induced by the
principal’s representation
when they concluded investment
transactions with the bank’s branch manager, the Court held
that this was proved, despite
the evidence showing that the
plaintiffs acted solely on the representation by the branch manager
who was the bank’s agent.
[56]
The Supreme Court of Appeal recorded the
following facts as proof of what influenced the plaintiffs to act:
“
Lapiner
is a businessman of experience.  It was his practice to make
regular enquiries as to what rates of interest were on
offer in the
market, with a view to investing surplus cash from time to time to
best advantage.  It was his practice to invest
only in what he
called ‘Triple A’ companies.  One day he came to
hear of the excellent return being offered by
the Kempton Park branch
of the NBS.  Assante had informed various financial brokers what
was on offer.  The scheme presented
was that the NBS was lending
to property developers who were prepared to pay high rates of
interest, which allowed the NBS to offer
better than average rates to
substantial investors who were willing to lend NBS the funds
necessary for the purpose.  One
of these brokers was Bradley.
Bradley spoke to another broker, Mason, who knew Lapiner.  The
result was a meeting between
Lapiner and Mason in October 1994.
The latter produced a blank letter of ‘guarantee’ from
the Kempton Park branch
of the NBS.  The NBS complied with
Lapiner’s criterion of a Triple A company.  The investment
was to be for a period
of some months.  The interest rate
offered was 15%, which Lapiner described as ‘slightly above the
going rate at the
time’.  Lapiner insisted in evidence
that he lent on the strength of NBS’s name.  He would have
been ‘horrified’
at the thought of his money being lent
not to the NBS but to developers whose identity he did not even
know.  At no time was
he aware of any developers’ names,
nor had he heard of Nel or NOK.”
[32]
[57]
The
Supreme Court of Appeal held that by appointing Mr Assante as the
branch manager, NBS Bank created a façade of regularity
and
order that made it possible for him to pursue his dishonest schemes.
The appointment with all its trappings, including
the branch
manager’s authority to accept investment deposits and pay them
out later with interest, held the Court, amounted
to a representation
by the bank that Mr Assante had authority to conclude investment
transactions of the kind made by him
with the plaintiffs.
[33]
[58]
But the facts set out above show that it
was not the appointment of Mr Assante and the usual powers of the
branch manager that attracted
the plaintiffs specifically to his
branch.  If that were the case, they could have made their
investment at any branch of
the bank.  But they did not because
no other branch offered that level of interest.  The evidence
revealed that the plaintiffs
were resident in Port Elizabeth and
Mr Assante’s branch was in Kempton Park in Johannesburg.
The plaintiffs were
drawn to this specific branch by the
representation made by the branch manager through Mr Mason, a broker
known to the plaintiffs.
They made their investment deposits
through the same broker.  When the investments failed, they sued
the bank alleging
that its branch manager, who created the scheme
relating to those investments as his own private business while using
the bank’s
name and resources, had ostensible authority to bind
the bank.  The Court upheld this contention.
[59]
The trial Court here adopted an incorrect
approach to pleadings.  That Court held that the applicant
should have pleaded estoppel
in replication.  It will be
recalled that the applicant had alleged in his particulars of claim
that Mr Geissler had ostensible
authority.  Vodacom denied this
fact in its plea.  Consequently, ostensible authority became one
of the issues to be
determined at trial, as properly defined by the
pleadings.  In the circumstances the trial Court erred in
holding that apparent
authority was not pleaded, because it was not
introduced by means of replication.
Was
ostensible authority established?
[60]
What remains for consideration insofar as
authority is concerned, is whether the applicant had established that
Mr Geissler had
ostensible authority when they concluded the
agreement in question.  The trial Court held that the applicant
had failed to
show that Mr Geissler had apparent authority.
This was because he could not establish a representation made by
Vodacom, and
in respect of which Vodacom had a reasonable expectation
that such representation could mislead someone like the applicant to
act
to his prejudice.  The trial Court followed decisions of the
Supreme Court of Appeal in cases like
NBS
Bank
.  But
as illustrated in this judgment, those cases applied an incorrect
standard.  As a result the trial Court applied
the test for
determining whether estoppel was established instead of whether
apparent authority was proved.  Consequently
the conclusion
reached was mistaken.
[61]
The question whether ostensible authority
was established must be assessed against the following facts which
emerge from the evidence
led by the applicant and was accepted by the
trial Court.  Out of his desperate situation, the applicant
formulated a brilliant
idea that was later described by one expert as
“a genius idea”.  He wanted to sell this idea for
financial gain.
Since he was young and a junior employee at
Vodacom, he was uncertain on how he could achieve his goal.  He
sought guidance
from his mentor, Mr Muchenje, who was a senior
manager at Vodacom.
[62]
Since the idea would only be exploited if a
product was developed as a new service to the public, Mr Muchenje
knew that Vodacom
had created a particular system through which the
idea could be introduced.  Crucial to the operation of that
system was the
authority conferred on Mr Geissler, one of the members
of the Board of Vodacom.  Mr Geissler was aptly given the title
of
Director of Product Development.  Notably, he enjoyed
enormous power in relation to his portfolio.  He held the power

to consider new products.  He could subject them to the
technical and commercial viability test before any of them could be

accepted and form part of Vodacom’s business offerings.  He
was not only Vodacom’s front man in its dealings with
third
parties in relation to new products but he also held the key to the
door through which every product was introduced.  As
the
evidence suggested, he could make or break any new product.  In
other words a successful introduction of new products
depended solely
on the power held by Mr Geissler.
[63]
Anybody who desired to sell a new product
to Vodacom had to go through Mr Geissler.  Consistent with
this, Mr Muchenje
advised the applicant not to send the memorandum
containing his idea to the Managing Director and the CEO but to
address it to
Mr Geissler.  Indeed Mr Geissler later negotiated
with the applicant for the use of his idea in developing a new
product which
became known as the “Please Call Me”
product.  As the new product was still to be tested for
commercial viability,
the parties agreed to defer for later
negotiations on remuneration.  This was agreed after the
applicant had intimated that
he wanted 15% of the revenue generated,
in the event the new product was successful.
[64]
As stated the product was and continues to
be a huge success, generating billions of rands for Vodacom.  And
yet the applicant
has not been paid even a cent for the use of his
idea.  This is the position despite the fact that Vodacom had
praised him
for the brilliant idea.  Vodacom contends that
although it had conferred enormous power on one of its directors, Mr
Geissler
was given no authority to bind it.  While this may be
so, it is however not the real issue.  The question that arises

is whether as it appeared to others, Mr Geissler had ostensible
authority to bind Vodacom.
[65]
This question must be considered with the
view to doing justice to all concerned.  The concept of apparent
authority as it
appears from the statement by Lord Denning, was
introduced into law for purposes of achieving justice in
circumstances where a
principal had created an impression that its
agent has authority to act on its behalf.  If this appears to be
the position
to others and an agreement that accords with that
appearance is concluded with the agent, then justice demands that the
principal
must be held liable in terms of the agreement.  It
cannot be gainsaid that on present facts, there is a yearning for
justice
and equity.
[66]
When account is taken of Mr Geissler’s
position as a member of the Board, the enormous power he wielded in
respect of new
products, the organisational structure within which he
exercised his power and the process which had to be followed before a
new
product could be introduced at Vodacom, there is only one
appearance that emerges.  It is that Mr Geissler had authority
to
negotiate all issues relating to the introduction of new products
at Vodacom.  Those issues included agreements under which
the
new products would be tested before approval by him and once
approved, the agreement in terms of which the new product would
be
acquired by Vodacom and the amount to be paid for it.  After
all, owing to his technical skills, he was best placed to
determine
the worth of a new product.
[67]
A similar analysis was followed in
South
African Broadcasting Corporation
.
There the Supreme Court of Appeal stated:
“
As
in the
NBS
Bank
case,
supra, the plaintiffs’ case was not limited to the appointment
of the various relevant officers who acted on the SABC’s

behalf.  It included their senior status, the trappings of their
appointment, the manner in which they went about their dealings
with
the plaintiffs, the use of official documents and processes, the
apparent approval of subordinate and related organisations,
such as
the pension fund and medical scheme, the length of time during which
the Ludick option was applied, the Board’s own
financial
accounts and the conduct of CEO’s who were Board members.
As
in the
NBS
Bank
case, the SABC created a façade of regularity and approval and
it is in the totality of the appearances that the representations

relied on are to be found.”
[34]
(Footnotes
omitted.)
[68]
I hold that the applicant had established
that Mr Geissler had apparent authority to bind Vodacom.  This
finding makes it unnecessary
to consider whether the common law
should be developed.
Differences
[69]
I have read the judgment prepared by my
Colleague Wallis AJ (concurring judgment).  While that judgment
agrees that Mr Makate
has established apparent authority, it differs
with this judgment on a narrower point.  This is whether
apparent authority
means estoppel.  It concludes that it does
and on the contrary I hold that it does not.  I wish to stress
that I accept
the proposition that estoppel applies to a contract of
agency based on apparent authority inasmuch as it applies to a
contract
based on actual authority.
[70]
Despite
the assertion that the concurring judgment follows well-established
principles, there is not a single case referred to in
our law that
holds that apparent authority is estoppel, except
NBS
Bank
and subsequent decisions that followed it.  While acknowledging
that the issue was not stated in clear terms in the early
decisions
of our courts, the concurring judgment relies heavily on
West
[35]
and
Insurance
Trust
.
[36]
But none of the statements quoted from these two cases says apparent
authority means estoppel.
[37]
The statement made by Greenberg J in
West
merely illustrates how estoppel operates and its effect in that
case.  It states “the effect of estoppel is that the

appellant is not entitled to deny that he gave this authority which
ostensibly he gave”.  That statement makes two points

only.  The first is that the appellant was precluded from
denying that he gave authority.  The second point is that in

proceedings to which estoppel applies, a party like the appellant was
deemed to have given authority.
[71]
Insurance
Trust
,
on which the concurring judgment relies, does not take the matter
further.  Both statements by Hathorn JP and Broome J cannot

reasonably be construed to be authority for the proposition that
apparent authority is estoppel.  The point made by both
statements is that a principal would be held liable where there is
actual authority or where the principal is estopped from denying
the
authority of the agent.  The question that remains is: what is
the authority for the conclusion that estoppel and apparent
authority
are one and the same thing?  With regard to
NBS
Bank
, I
have already given a detailed analysis that shows that the conclusion
was reached without motivation and no authority was cited
for the
conclusion.  The subsequent cases merely followed
NBS
Bank
.
[72]
On
the contrary, our law has always treated estoppel in the field of
contracts as distinct.  For example, if a person conducts

herself in a manner that would reasonably cause another to believe
that she was assenting to contractual terms proposed by the
latter,
and acting on that belief the latter enters into a contract with her,
she would be bound as if she had intended to agree,
even though that
may not have been her intention.
[38]
Her liability may be based on either estoppel or the principle of
objective theory of contract.
[39]
[73]
In
our law this kind of contract is known as the apparent agreement
because it does not have consensus as its foundation.
What is
clear though is that the objective theory of contract is not
construed to mean estoppel, even though they both apply and
arise
from the same facts.
[40]
In
Saambou
,
[41]
Jansen JA acknowledged the distinction between these two concepts.
There the Court observed that to some extent estoppel
overlaps with
the objective theory of contract but did not treat them as one.
[74]
I can think of no reason in principle or
logic which warrants a different approach in the case of apparent
authority and estoppel.
Both apparent contract and apparent
authority derive their existence from the conduct of the party to be
held liable.  Both
form part of our law of contract.  They
come into being from what reasonably appears to be the position.
Therefore,
if a distinction is drawn between estoppel and the
objective theory of contract in the case of the apparent agreement,
the same
should be the position in respect of apparent authority and
estoppel in contracts of agency.
[75]
It is
apparent that estoppel and ostensible authority are different, even
though there may be some overlap between them.  Ostensible

authority is the power to act as an agent indicated by the
circumstances, even if the agent may not truly have been given the
power.
[42]
Whereas estoppel, as observed in
West
,
is the rule that precludes the principal from denying that she gave
authority to the agent.
[76]
In an
attempt to show that the statement quoted in
NBS
Bank
from
Hely Hutchinson
CA
should not be literally construed, the concurring judgment cites
other English cases, namely,
Freeman
&
Lockyer
[43]
and
Armagas
CA
.
[44]
However, a closer reading of these cases reveals the confusion in
English law which was lamented by Hathorn JP in
Insurance
Trust
.
He said:
“
The
law in England seems to me to be in a state of confusion, especially
as applied to companies.  There are signs that the
same
confusion, borrowed from England, is finding its way into our law.
Unless precision of thought and expression are insisted
upon in South
Africa this branch of the law, principles which are simple and plain,
will become clouded.”
[45]
[77]
This state of confusion is illustrated by
statements from
Freeman & Lockyer
and
Armagas CA
,
quoted in the concurring judgment. In
Freeman
& Lockyer
it was stated:
“
An
‘apparent’ or ‘ostensible’ authority, on the
other hand, is a legal relationship between the principal
and the
contractor created by a representation, made by the principal to the
contractor, intended to be and in fact acted on by
the contractor,
that the agent has authority to enter on behalf of the principal into
a contract of a kind within the scope of
the ‘apparent’
authority, so as to render the principal liable to perform any
obligations imposed on him by such contract.
To the
relationship so created the agent is a stranger.  He need not be
(although he generally is) aware of the existence
of the
representation.
The
representation, when acted on by the contractor by entering into a
contract with the agent, operates as an estoppel
,
preventing the principal from asserting that he is not bound by the
contract.  It is irrelevant whether the agent had actual

authority to enter into the contract.”  (Emphasis added.)
[78]
While the first part of this statement
defines accurately apparent authority that renders the principal
liable, the confusion arises
from the last two sentences which
introduce the issue of estoppel, as if it is an integral part of
apparent authority.  The
fact that the same representation that
gave rise to apparent authority may also be the basis of estoppel,
does not collapse the
two concepts into one.  They remain
separate and the principal’s liability may be based on one or
the other.  But
the last sentence heightens the level of
confusion.  It suggests that the principal is precluded from
disputing liability
where a representation was made and acted upon by
the third party and adds that it is “irrelevant whether the
agent had actual
authority to enter into the contract”.
[79]
This sentence indicates that the Court was
addressing the issue of estoppel in general terms.  In that
context, the application
of estoppel was not limited to a case of
apparent authority but also covered the situation where there was
actual authority.
In either case, if the principal had made a
representation that was acted on by a third party, she would be
prevented by operation
of estoppel from denying that the agent had
authority.  This demonstrates beyond doubt that estoppel applies
even in a case
where actual authority had been conferred.  If we
accept, as we must, that in a case where actual authority was
granted, the
principal’s liability may be based either on
actual authority or estoppel, it follows that in the case of apparent
authority,
liability may equally be based on either apparent
authority or estoppel.  The fact that in the latter case, both
apparent
authority and estoppel derive their existence from the
principal’s representation does not alter this principle.
[80]
The approach that collapses apparent
authority and estoppel into the same thing, as illustrated here, is
not underpinned by principle,
let alone an established one as
suggested.  Instead that approach lacks, in my respectful view,
the precision of thought and
expression for which Hathorn JP
advocated in
Insurance
Trust
, 72
years ago.  The conflation of the two concepts in the cases
cited in the concurring judgment does not constitute principle.
Nor
does the exercise of referring to a long line of cases on estoppel
resolve the question whether estoppel and apparent
authority are
one.  There is no doubt that our law has recognised estoppel and
circumstances under which it applies for a
century.  But that
does not mean estoppel is apparent authority.
Prescription
[81]
Relying
on its construction of section 10(1), read with
sections 11(d)
,
12
(1)
and
12
(3) of the
Prescription Act, the
trial Court held that the
applicant’s claim had prescribed.  It will be recalled
that the applicant sought a declaration
to the effect that the
parties had concluded an oral agreement and an order directing
Vodacom “to commence with bona fide
negotiations to determine a
reasonable remuneration” payable to the applicant.
[46]
It was the claim relating to Vodacom being ordered to start
negotiations which was held to have been extinguished by prescription

and not the declaration.  The declaration was withheld on the
basis that it would be of academic value as it related to a

prescribed debt.
[47]
[82]
The
High Court’s conclusion on prescription hinged on its
interpretation of the word “debt” that appears in
section
10(1)
of the
Prescription Act.  The
word “debt”, the
trial Court pronounced, has a wide meaning.
[48]
The Court proceeded to state that the wide meaning of the word—
“
would
not only include a claim to pay a plaintiff a share of revenue, but
also a claim that the defendant complies with its obligations
in
terms of the contract, including its obligation to negotiate with the
plaintiff concerning reasonable remuneration for the use
of his
idea.”
[49]
[83]
For
the conclusion that a debt contemplated in
section 10(1)
of the
Prescription Act includes
a claim to negotiate terms of an agreement,
the trial Court relied on
Desai
,
[50]
a judgment of the Appellate Division (now the Supreme Court of
Appeal) and
LTA
Construction
,
[51]
a decision of the Cape of Good Hope Division (now the Western Cape
Division of the High Court).  More particularly it relied
on the
following passage in
Desai
for the wide meaning it assigned to the word:
“
S10(4)
of the Prescription Act 68 of 1969 (“the Act”) lays down
that a ‘debt’ shall be extinguished after
the lapse of
the relevant prescriptive period, which in the instant case was three
years (see section 11(d)). The term “debt”
is not defined
in the Act but in the context of section 10(1) it has a wide and
general meaning, and
includes
an obligation to do something or refrain from doing something.
”
[52]
(Emphasis added.)
[84]
On
this construction of
Desai
,
every obligation irrespective of whether it is positive or negative,
constitutes a debt as envisaged in section 10(1).  This
in turn
meant that any claim that required a party to do something or refrain
from doing something, irrespective of the nature
of that something,
amounted to a debt that prescribed in terms of section 10(1).
Under this interpretation, a claim for an
interdict would amount to a
debt.  However, the Appellate Division in
Desai
did not spell out anything in section 10(1) that demonstrated that
“debt” was used in that sense.  What needs
to be
determined is whether the pre-constitutional interpretation of the
relevant provisions is still good law.  In determining
this
question, we are guided by section 39(2) of the
Constitution.
[53]
[85]
The
absence of any explanation for so broad a construction of the word
“debt” is significant because it is inconsistent
with
earlier decisions of the same Court that gave the word a more
circumscribed meaning.  In
Escom
[54]
the
Appellate Division said that the word “debt” in the
Prescription Act should
be given the meaning ascribed to it in the
Shorter Oxford English Dictionary, namely:
“
1.
Something owed or due: something (as money, goods or service) which
one person is under an obligation to pay or render to another.

2. A liability or obligation to pay or render something; the
condition of being so obligated.”
[55]
Escom
was cited
and followed in subsequent cases.
[56]
It was also cited as authority for the proposition in
Desai
NO
.
[57]
[86]
It is
unclear whether the Court in
Desai
intended
to extend the meaning of the word “debt” beyond the
meaning given to it in
Escom.
[58]
If it did, it does not appear that this followed either from any
submissions made to the Court by the parties or any issue arising
in
the case.  Nor, if that was the intention, did the Court give
consideration to the constitutional imperatives in regard
to the
interpretation of statutes in section 39(2) of the Constitution.
Constitutional
approach
[87]
Since
the coming into force of the Constitution in February 1997, every
court that interprets legislation is bound to read a legislative

provision through the prism of the Constitution.
[59]
In
Fraser
,
Van der Westhuizen J explained the role of section 39(2) in
these terms:
“
When
interpreting legislation, a court must promote the spirit, purport
and objects of the Bill of Rights in terms of section 39(2)
of the
Constitution.  This Court has made clear that section 39(2)
fashions a mandatory constitutional canon of statutory

interpretation.”
[60]
(Footnotes omitted.)
[88]
It is apparent from
Fraser
that section 39(2) introduced to our law a new rule in terms of which
statutes must be construed.  It also appears from the
same
statement that this new aid of interpretation is mandatory.  This
means that courts must at all times bear in mind the
provisions of
section 39(2) when interpreting legislation.  If the provision
under construction implicates or affects rights
in the Bill of
Rights, then the obligation in section 39(2) is activated.  The
court is duty-bound to promote the purport,
spirit and objects of the
Bill of Rights in the process of interpreting the provision in
question.
[89]
The objects of the Bill of Rights are
promoted by, where the provision is capable of more than one meaning,
adopting a meaning that
does not limit a right in the Bill of Rights.
If the provision is not only capable of a construction that
avoids limiting
rights in the Bill of Rights but also bears a meaning
that promotes those rights, the court is obliged to prefer the latter
meaning.
For, as this Court observed in
Fraser
:
“
Section
39(2) requires more from a court than to avoid an interpretation that
conflicts with the Bill of Rights.  It demands
the promotion of
the spirit, purport and objects of the Bill of Rights.”
[61]
[90]
It cannot be disputed that section 10(1)
read with
sections 11
and
12
of the
Prescription Act limits
the
rights guaranteed by section 34 of the Constitution.  Therefore,
in construing those provisions, the High Court was obliged
to follow
section 39(2), irrespective of whether the parties had asked for it
or not.  This is so because the operation of
section 39(2) does
not depend on the wishes of litigants.  The Constitution in
plain terms mandates courts to invoke the section
when discharging
their judicial function of interpreting legislation.  That duty
is triggered as soon as the provision under
interpretation affects
the rights in the Bill of Rights.
[91]
In
Road
Accident Fund
,
[62]
this Court, having expressed reservations on whether an obligation
may constitute a debt contemplated in the
Prescription Act, stated
that the failure to meet a prescription deadline set in terms of the
Act, denies a litigant access to a court.  What this
means is
that if the Act finds application in a particular case, it must be
construed in accordance with section 39(2).  On
this approach an
interpretation of debt which must be preferred, is the one that is
least intrusive on the right of access to courts.
In
SATAWU
,
[63]
this Court affirmed the principle in these terms:
“
Constitutional
rights conferred without express limitation should not be cut down by
reading implicit limitations onto them, and
when legislature
provisions limits or intrudes upon those rights they should be
interpreted in a manner least restrictive of the
right if the text is
reasonably capable of bearing that meaning.”  (Footnotes
omitted.)
[92]
However, in present circumstances it is not
necessary to determine the exact meaning of “debt” as
envisaged in section
10.  This is because the claim we are
concerned with falls beyond the scope of the word as determined in
cases like
Escom
which held that a debt is an obligation to pay money, deliver goods,
or render services.  Here the applicant did not ask to
enforce
any of these obligations.  Instead, he requested an order
forcing Vodacom to commence negotiations with him for determining

compensation for the profitable use of his idea.
[93]
To the extent that
Desai
went beyond what was said in
Escom
it was decided in error.  There is nothing in
Escom
that remotely suggests that “debt” includes every
obligation to do something or refrain from doing something apart
from
payment or delivery.  It follows that the trial Court attached
an incorrect meaning to the word “debt”.
A debt
contemplated in
section 10
of the
Prescription Act does
not cover the
present claim.  Therefore, the section does not apply to the
present claim, which did not prescribe.
Remedy
[94]
The remedy sought by the applicant flows
from the parties’ agreement.  In other words he seeks the
enforcement of that
agreement.  It will be remembered that the
relevant term he seeks to enforce is the one that required the
parties to negotiate
in good faith compensation for the use of his
idea.  This open ended term was necessitated by the special
circumstances of
this case.  The applicant’s idea was
novel and the parties were not certain whether a commercially viable
product could
be developed from it.  Hence they agreed to later
negotiate the amount of compensation once the product was developed
and
tried for commercial sustainability and profitability.
Agreement
to negotiate in good faith
[95]
Agreements to negotiate in good faith are
taken as a species of the
pacta de contrahendo
(agreements to agree).  Generally they are regarded as a
category of contracts whose purpose is to create other contracts
in
future.  But sometimes contracting parties, as was the position
here, may be confronted by a situation where they are not
able to
agree on some of the terms of the contract.  To resolve the
problem, they may arrange to negotiate and agree on the
outstanding
terms on a future date.  The arrangement may form part of the
concluded agreement.  A dispute may arise,
if one of the
contracting parties, as was the case here, refuses to negotiate the
outstanding term so that the parties’ agreement
may be
executed.  When this occurs, the question that arises sharply is
whether the term to negotiate is enforceable at the
instance of the
innocent party.
[96]
Until
1992, our courts were reluctant to enforce agreements to negotiate in
good faith, in the belief that contracting parties are
free to drive
a hard bargain and to withdraw from negotiations if they are no
longer interested.  The concern from our courts
was that it was
difficult, if not impossible, to enforce open-ended terms of that
kind without an objective standard to which bargaining
parties could
be held.  But in
Letaba
Sawmills
[64]
the Appellate Division held that a term to negotiate in good faith
there was enforceable because it contained a deadlock-breaking

mechanism.  In that case the parties had agreed that should
consensus on outstanding matters elude them, then an arbitrator
may
resolve the issue.  The Court did not regard the arbitrator’s
role as amounting to a third party making the contract
for the
parties but as an enforcement of what the parties themselves had
agreed.  Our law considers the parties’ freedom
of
contract to be sacrosanct and that the parties’ consensus must
be reached freely.
[97]
Therefore,
currently the position in our common law is that an agreement to
negotiate in good faith is enforceable if it provides
for a
deadlock-breaking mechanism in the event of the negotiating parties
not reaching consensus.  This position was reaffirmed
by the
Supreme Court of Appeal in
Southernport
Developments
.
[65]
In that case parties to a lease agreed to enter into good faith
negotiations in respect of certain specified properties.
The
agreement provided that if the parties were unable to agree on any of
the terms of the yet-to-be negotiated lease, the
dispute would be
referred to an arbitrator whose decision would be final and binding.
[98]
When
the defendant refused to negotiate, the plaintiff instituted action,
seeking an order directing the defendant to negotiate
in good faith.
This was met with an exception grounded on the contention that the
agreement to negotiate in good faith on
which the plaintiff relied
was not enforceable.  Following
Firechem
Free State
,
[66]
the High Court upheld the exception and dismissed the claim.
The Supreme Court of Appeal in
Firechem
Free State
had declared that—
“
[a]n
agreement that parties will negotiate to conclude another agreement
is not enforceable because of the absolute discretion vested
in the
parties to agree or to disagree.”
[67]
[99]
In
Southernport
Developments
, the Court distinguished
Firechem Free State
on the basis that the agreement in
Firechem
Free State
had no deadlock-breaking
mechanism.  In rejecting the argument that the agreement was not
enforceable Ponnan AJA stated:
“
I
can conceive of no reason why the principle that
Letaba
Sawmills
so firmly establishes should be circumscribed to the determination
solely of the rental in a contract of lease.  The flexibility

that
Letaba
Sawmills
introduces must logically extend to other terms as well as the
formulation of which the parties to a contract may have chosen to

delegate to a third party.”
[68]
[100]
Whether
an agreement to negotiate in good faith is enforceable where there is
no deadlock-breaking mechanism remains a grey area
of our law.
This is because
Firechem
Free State
suggests that it is not enforceable while
Everfresh
[69]
suggests otherwise.  In
Everfresh
,
Moseneke DCJ said:
“
Were
a court to entertain Everfresh’s argument, the underlying
notion of good faith in contract law, the maxim of contractual

doctrine that agreements seriously entered into should be enforced,
and the value of ubuntu, which inspires much of our constitutional

compact, may tilt the argument in its favour.  Contracting
parties certainly need to relate to each other in good faith.

Where there is a contractual obligation to negotiate, it would be
hardly imaginable that our constitutional values would not require

that the negotiation must be done reasonably, with a view to reaching
an agreement and in good faith.”
[70]
[101]
Happily here, the agreement to negotiate in
good faith the amount of the compensation payable, contained a
deadlock-breaking mechanism.
The parties had agreed that in the
event that they disagreed on the amount to be paid, Vodacom’s
CEO would determine the
amount.  While choosing the CEO may not
be regarded as a delegation of power to a third party, the choice
still constitutes
a deadlock-breaking mechanism.  It is how the
parties in their wisdom formulated the relevant clause and their
choice must
be respected and given effect.  This is what they
have bargained freely and consequently they must be held to it.
[102]
However, it is not only difficult in the
present circumstances but also undesirable to lay down an objective
standard of good faith
bargaining which the parties must undertake.
Suffice it to say that what the parties are precluded from doing is
to negotiate
in bad faith.  They are not allowed to enter into
those negotiations just to go through the motions.  For that
would
not be what they have agreed to do but a charade.  Both
sides must enter into negotiations with serious intent to reach
consensus.
[103]
But if despite best efforts agreement on
the issue of compensation remains elusive, then the deadlock-breaking
clause must be invoked.
The matter must be referred to
Vodacom’s CEO for determination.  This suggests that
Vodacom may not be represented by
its CEO at the negotiations.
The CEO cannot negotiate and at the same time break the deadlock.
That was not what was
envisaged in the parties’ agreement.
Concluding
remarks
[104]
The stance taken by Vodacom in this
litigation is unfortunate.  It is not consistent with what was
expected of a company that
heaped praises on the applicant for his
brilliant idea on which its “Please Call Me” service was
constructed.
The service had become so popular and profitable
that revenue in huge sums of money was generated, for Vodacom to
smile all the
way to the bank.  Yet it did not compensate the
applicant even with a penny for his idea.  No smile was brought
to his
face for his innovation.  This is besides the fact that
Vodacom may have been entitled to raise the legal defences it
advanced.
As a party, it was entitled to have its day in court
and have those defences adjudicated.  This is guaranteed by
section 34
of the Constitution.  However, it is ironic that in
pursuit of its constitutional right, Vodacom invoked legislation from
the height of the apartheid era, to prevent the applicant from
exercising the same right.
[105]
In not compensating the applicant and
persisting in advancing the legal defences even after the trial Court
had emphatically found
that an agreement was concluded, Vodacom
associated itself with the dishonourable conduct of its former CEO,
Mr Knott-Craig and
his colleague, Mr Geissler.  This leaves a
sour taste in the mouth.  It is not the kind of conduct to be
expected from
an ethical corporate entity.
Costs
[106]
As
the applicant has succeeded and the
Biowatch
[71]
principle
finds no application here, costs must follow the event.
Although each side had a team of four counsel, I consider
it fair to
award costs of two counsel only.  Two issues were raised in the
main.  Neither renders the circumstances so
exceptional as to
justify employment of more than two counsel.
Order
[107]
In the result the following order is made:
1.
Leave to appeal is granted.
2.
The appeal is upheld.
3.
The order of the Gauteng Local Division of
the High Court, Johannesburg, is set aside and replaced with the
following order:
“
(a)
It is declared that Vodacom (Pty) Limited is bound by the agreement
concluded by Mr Kenneth Nkosana
Makate and Mr Philip
Geissler.
(b)
Vodacom is ordered to commence negotiations in good faith with
Mr Kenneth Nkosana Makate
for determining a reasonable
compensation payable to him in terms of the agreement.
(c)
In the event of the parties failing to agree on the reasonable
compensation, the matter
must be submitted to Vodacom’s Chief
Executive Officer for determination of the amount within a reasonable
time.
(d)
Vodacom is ordered to pay the costs of the action, including the
costs of two counsel, if
applicable, and the costs of the expert,
Mr Zatkovich.”
4.
The negotiations mentioned in 3(b) must commence within 30 calendar
days from
the date of this order.
5.
Vodacom is ordered to pay the applicant’s costs in this Court
and in the
Supreme Court of Appeal, which include costs of two
counsel, where applicable.
WALLIS
AJ (Cameron J, Madlanga J and Van der Westhuizen J concurring):
[108]
I
have had the pleasure of reading the main judgment by Jafta J.
We arrive at the same destination in this case, namely that
Mr Makate
is entitled to the relief set out in the main judgment.  But on
one aspect, the issue of ostensible authority,
[72]
we differ. Even there the difference is small, one of jurisprudential
nomenclature or categorisation.  We agree that the key
issue is
whether Vodacom represented that Mr Geissler had authority to
conclude the agreement with Mr Makate.  We agree
that it made
that representation, although I rely on a wider range of facts than
Jafta J in reaching that conclusion.  We
agree also that the
representation justifies us in holding that Mr Geissler had
ostensible authority to conclude that contract.
[109]
We
disagree on the juristic nature of ostensible authority where there
is no actual authority.  In my view it is settled law
that this
is a form or instance of estoppel, which is why it is commonly
referred to in judgments and textbooks as agency by estoppel.

He disagrees.  Our disagreement is not relevant to the outcome
of this case, but it has the potential to cause unnecessary
confusion
in a settled area of the law, which is undesirable.  I am
compelled to write by the following considerations.  First,
the
issue was not debated before us and we were not asked to alter the
settled legal position.  Second, my Colleague’s
approach
is based on his understanding of the English law.  That
understanding, based as it is on a single sentence in a judgment
of
Lord Denning in the Court of Appeal,
[73]
is inconsistent with the authoritative judgments of English courts.
Third, his approach is inconsistent with the judgments
of our
courts since the early twentieth century as well as the views of our
textbook writers.  Fourth, he advances no reason
of principle
for adopting this approach and does not locate it in any
constitutional imperative.  Fifth, the enquiry arose
only
because of the erroneous approach of the trial Court to the proper
pleading of apparent or ostensible authority.
[110]
In
the light of that disagreement it is perhaps best that I set out my
own approach at the outset.  I accept that estoppel
is a
wide-ranging equitable concept that finds application in a number of
different settings, not only where issues of authority
or agency
arise.  Cases that spring to mind are the well-known motor
dealer cases,
[74]
share dealing transactions
[75]
and other vindicatory actions.
[76]
It has been said that the Turquand Rule of company law is merely an
application of estoppel.
[77]
Estoppel has also been held to apply where a property owner failed to
have an erroneous entry corrected in the Deeds Registry.
[78]
Countless other examples of estoppel are to be found in the reported
cases.  On both principle and authority I am convinced
that
ostensible authority is merely one more instance of estoppel.
It is not by any means the only one, but it is one that
crops up
frequently in practice, where there is no authority, express or
implied.  There are cases in which ostensible authority

coincides with actual authority arising by implication and in that
event, to adopt my Colleague’s metaphor, actual authority
and
ostensible authority will be two sides of the same coin, but this is
a case where it is accepted that there was no authority
at all,
express or implied.  That in my view takes it into the realm of
estoppel.
The
facts
[111]
My
Colleague has outlined the relevant facts in paragraphs [2] to [13]
of the main judgment.  I have little to add to that
exposition
and what I add focuses on the events surrounding the conclusion of
the contract on which Mr Makate relied for his claim.
Mr Makate
had an idea for a new product that became “Please Call Me”.
From the outset he realised its commercial
potential.  He
prepared a memorandum incorporating the idea addressed to his
immediate line manager Mr Muchenje, but copied
to the Group Chief
Executive of the Vodacom Group, Mr Knott-Craig (CEO), and other
senior executives.
[79]
He discussed it with Mr Muchenje explaining that he wished to be
remunerated for the idea and, if Vodacom was not interested,
he would
take it to a competitor.  Mr Muchenje thought the idea
worthwhile, but said it would have to be approved by the Product

Development Department before it could be taken to the executive.
He undertook to discuss it with Mr Geissler, the Director
of Product
Development and Management.  Mr Geissler responded favourably to
an initial approach by Mr Muchenje and on that
basis Mr Makate
amended the addressees of the memorandum and sent it to Mr Geissler
on 22 November 2000.
[112]
It does not appear that Mr Makate spoke to
Mr Geissler until after the Product Development Department had
discovered how to make
his idea technically feasible.  This
appears to have taken about a month because on 19 December 2000
Mr Muchenje
informed Mr Makate that the company was going to
introduce a product similar to his concept.  On 26 December 2000
Mr Geissler
sent him an email saying that he would be “kept in
the loop” concerning the product.  On 18 January 2001
Mr Makate
sent an email to Mr Geissler asking about
developments and recording that they had not yet met.  Two days
later Mr Geissler
responded by email and asked him whether he had
used the new function.  He added: “Let me know if you are
OK with it.”
Between 23 and 28 January 2001 the Product
Development Department approved the launch of the product.  On
30 January 2001
Mr Geissler told Mr Makate that Vodacom was launching
the product for all phones and asked him for his suggestions in
regard to
a name for the new product.
[113]
Mr Makate’s response to this enquiry
is significant because, in addition to suggesting a possible name, he
added:
“
Lastly
as per our verbal conversation, I think we should start talking about
‘REWARDS’, can you please notify me when
can this be
feasible.”
This
shows that between 18 and 30 January 2001 a meeting had taken place
between Mr
Geissler and Mr Makate and
among the topics discussed had been remuneration for his idea.
This is consistent with Mr Makate’s evidence
that he and Mr Geissler met and discussed the fact that if Vodacom
launched a
product in accordance with his idea he would be
remunerated for it.  It is also consistent with Mr Geissler’s
response
on 6 February 2001 that, once the product was launched
and was successful, he would discuss the issue of a reward with Mr
Knott-Craig.  The launch occurred on about 10 February 2001
and was an immediate success.
[114]
Mr
Geissler did not give evidence so we do not have his version of his
meeting with Mr Makate.
[80]
The latter’s version that there was a specific agreement that
he would be remunerated for his idea stands unchallenged
and was
accepted by the trial Court.  However, no agreement was
reached on the precise form or amount of such remuneration.
Mr
Makate said that he wanted a profit share and had suggested 15%.  Mr
Muchenje confirmed that this figure was mentioned
in his discussions
with Mr Makate.  But the evidence is clear that Mr Geissler
did not agree to this figure or any basis
for determining the
remuneration.  Everything was to depend on the successful launch
of the product after which the matter
would be discussed.  If
those discussions did not lead to agreement the question of
remuneration would be referred to Mr Knott-Craig
for determination.
As Mr Knott-Craig has now left the company Mr Makate says that
the incumbent CEO should perform this tie-breaking
function.
[115]
On the basis of the facts and events
summarised above Mr Makate sued Vodacom, basing his claim on a
contract concluded between him
and Vodacom represented by Mr
Geissler.  As often happens, his pleadings were more ambitious
than the evidence led in support
of this case.  Over time they
were amended.  At the close of the trial he claimed only that
the contract between him
and Vodacom was that in return for his
providing the idea to Vodacom it would enter into bona fide
negotiations with him in order
to agree on a reasonable remuneration
for his idea. Should they be unable to agree on a reasonable
remuneration the matter would
be referred to Mr Knott-Craig for his
adjudication.  The trial Court held this to have been proved on
a balance of probabilities.
[116]
We
were asked to revisit this conclusion and were furnished with
detailed submissions attacking the trial Judge’s conclusion.

I agree with Jafta J where he says
[81]
that it is inappropriate for this Court to be asked to interfere with
the factual findings by the trial Court.  That should
not be the
function of this Court.  Whilst there may be a few cases where
it is appropriate and necessary for it to make factual
findings on
the basis of material in the record, where on a particular issue
necessary for the proper determination of the case
the trial Court
has not made a factual finding, in general this Court should proceed
on the basis that the factual findings by
the court from which the
matter emanates are correct.
[117]
But
in this instance that should not be taken as casting doubt on the
correctness of those findings.  The criticism addressed
to them,
largely on the basis of the terms in which the claim was couched in
letters of demand sent some considerable time after
the relevant
events, ignores that in all those letters it was consistently Mr
Makate’s case that he was to receive reasonable
compensation if
his idea proved commercially successful.  It also ignores
Vodacom’s failure to call the one witness
who could have
rebutted Mr Makate, namely, Mr Geissler.  Lastly, it ignores one
of the more disgraceful aspects of this case
[82]
namely that, after the institution of this action, Mr Knott-Craig
published his autobiography and falsely claimed credit for
the
“Please Call Me” idea.  To make matters worse,
when challenged, he procured an email from Mr Geissler
to bolster his
untruthful version.
Issues
[118]
Accepting
that Mr Makate and Mr Geissler concluded an agreement in the terms
set out above, I agree with Jafta J that a contract
on those terms is
enforceable.
[83]
That renders it unnecessary for us to consider the issues raised in
this Court in
Everfresh
.
[84]
The primary issue is whether that agreement was binding upon Vodacom.
In the particulars of claim it was alleged that
Mr Geissler had
authority to conclude the agreement, alternatively had ostensible
authority to do so.  By the close of Mr
Makate’s case his
case was expressly confined to one based on ostensible authority. The
trial Court held that he failed to
establish such authority and on
that ground non suited him.  It went on to hold that in any
event his claim had prescribed.
These are the issues that must
be decided by this Court.
Pleading
ostensible authority
[119]
At
the outset it is necessary to deal with two technical issues raised
by Vodacom.  First, there was a complaint that ostensible

authority may only be raised by way of a replication delivered in
response to the defendant pleading a defence of lack of authority.

But that was pedantry, and its acceptance by the trial Court was
incorrect.  Where the issue of authority has been pertinently

raised before the commencement of the action it is usual for
ostensible authority to be pleaded in the particulars of claim.
[85]
Where the plaintiff alleges authority and this is denied in the plea
ostensible authority is raised by way of a replication.
[86]
It is necessary for me to expand on this because, as is apparent from
the main judgment, the Judge’s finding that ostensible

authority could only be raised by way of a replication lies at the
root of my colleague’s endeavour to distinguish ostensible

authority from estoppel.
[120]
The
only authority relied on by the Judge was
Amler
.
[87]
In the section dealing with estoppel the following statement appears:
“
A
plaintiff wishing to rely on estoppel must plead it in the
replication in reply to the defendant’s plea where reliance is

placed on the true facts.”
But
the case relied on in support of that proposition
[88]
contains no such statement.  The judgment in the High Court also
overlooked the fact that in the section of the same work
dealing with
agency and ostensible authority a less definitive stance is taken.
First it is said that
—
“
if
reliance is placed on ostensible authority, the elements of estoppel
must be alleged.”
[89]
Then
the passage goes on:
“
Because
estoppel can only be raised as a defence, a plaintiff intending to
rely upon estoppel is well advised to allege actual authority
and
rely on estoppel as an alternative in the replication.”
This
is less dogmatic because “well advised” is not the same
as “must”.  The author quotes neither
reason nor
authority for that proposition and it is inconsistent with what
occurs in practice.  It is pointless to say that,
where there is
no actual authority, either express or implied, the plaintiff must
nonetheless allege authority and wait for the
inevitable denial in
order to raise what was all along the real issue, namely, ostensible
authority.  In a different capacity
the learned author of
Amler
has
pointed out that litigation is not a game.
[90]
The suggested approach to pleading ostensible authority is at odds
with that notion.  It also finds no support in
Beck
,
[91]
the other leading textbook on pleading, or the leading textbook on
estoppel.
[92]
But the latter says:
“
[I]t
is submitted that the terms ‘agency by estoppel’,
‘apparent authority’ and ‘ostensible authority’

in principle refer to the same circumstances.”
[93]
[121]
Where
a plaintiff is aware that the defendant will, or will probably, raise
a defence of lack of authority, there can be no criticism
of them for
pleading ostensible authority from the outset, either as an
alternative to actual authority, or on its own.  There
is no
merit in the suggestion that this is impermissible because, in the
colourful phrase of an English judge,
[94]
estoppel is a shield and not a sword.  Where a party sues on a
contract concluded with an agent whose authority is denied,
proof
that they had ostensible authority is as much part of their cause of
action as would be proof of actual authority, and that
would
undoubtedly need to be pleaded from the outset.  Estoppel serves
two purposes.  It either places an obstacle in
the path of a
case that might otherwise succeed, or it removes an impediment in the
path of a case that might fail without its
removal.
[95]
In the latter case I can see no reason why the impediment should not
be removed at the outset.
[122]
The
proposition that estoppel may only be used as a shield and not a
sword does not relate to the manner in which it is pleaded,
but to
the use to which it is put.  One of its proper uses is to remove
an impediment to the successful prosecution of an
action.
Invoking it in relation to a plea that the representative of a
contracting party lacked authority to conclude the
contract is an
obvious example.  In that case it overcomes the hurdle of
absence of authority and binds the other party to
the contract
concluded without authority.  An example of an attempt to use it
to create a cause of action is furnished by
Union
Government v National Bank of South Africa Ltd
.
[96]
There, a number of postal orders had been stolen, fraudulently made
out to various individuals and cashed with the bank.
The
Government sued to recover the amount that the Post Office had paid
the bank when postal orders were presented for payment.
The
bank legitimately, albeit unsuccessfully, relied on an estoppel to
resist a claim for repayment under the
condictio
indebiti
.
But it also tried to rely on the same facts to justify a claim for
payment on further postal orders that it had cashed,
but which it had
not had an opportunity to present to the Post Office for payment.
As the postal orders were fraudulent it
had no legal right to demand
that the Post Office cash them.  It was in that context that
Innes CJ said:
“
A
plaintiff cannot invoke estoppel to create a cause of action where
none existed before.”
[97]
[123]
For all those reasons the finding by the
trial Court that ostensible authority was not pleaded, because it had
to be pleaded by
way of replication was wrong.  There is
therefore no reason to say that ostensible authority is not a form of
estoppel in
order to hold that ostensible authority was properly
raised in the particulars of claim.  It clearly was raised and
the argument
advanced on behalf of Vodacom was pettifogging in the
extreme.
[124]
A more serious objection might have been
that the issue of ostensible authority was not at any stage properly
pleaded.  I agree
that the pleading was seriously deficient in
detail and that the obligation to plead all the elements of estoppel
was ignored.
But Vodacom initially sought particularity by way
of a request for particulars for trial and, when the answer failed to
disclose
the requested particulars, no attempt was made to compel a
proper reply.  When the case came to trial in 2013 Vodacom
delivered
a further very detailed request for further particulars for
trial, but did not ask for any further information in regard to the

question of ostensible authority.
[125]
Against that background, the objections to
Mr Makate’s reliance on ostensible authority raised in the
course of the trial,
and in this Court, ring rather hollow.
During the trial counsel went so far as to say that a case based on
ostensible authority
would be a wholly new case and that it would
require full particularity of the nature of the representation
founding the ostensible
authority.  This overlooked the fact
that the allegation appeared in the particulars of claim; that the
particularity he said
he required had been sought and refused; that
its production was not compelled by Vodacom; that during the
application for absolution
from the instance at the close of the
plaintiff’s case it was made clear that reliance was being
placed on ostensible authority;
and that both endeavours by the
plaintiff to address these complaints by way of amendment were
resisted by Vodacom.  It has
not been shown that the course of
the trial would have been any different had the pleading of
ostensible authority been more detailed,
or that Vodacom has in any
way been prejudiced by the lack of particularity in regard to this
aspect of the case.  The objection
must be rejected.
Is
ostensible authority based on estoppel?
[126]
The
trial Court held that ostensible authority is a form of estoppel and
that Mr Makate failed to prove the requisites of estoppel.

My Colleague holds that this approach is incorrect and that “although
ostensible authority and estoppel have at times been
treated
synonymously by our courts, they are not one and the same
thing”.
[98]
His view is that: “[a]ctual authority and ostensible or
apparent authority are the opposite sides of the same coin”.
[99]
This is explained
[100]
on the basis that a misrepresentation that a person has authority may
lead to the appearance that the agent has the power to act
on behalf
of the principal and that—
“
[t]his
is known as ostensible or apparent authority in our law.  While
this kind of authority may not have been conferred by
the principal,
it is still taken to be the authority of the agent as it appears to
others.  It is distinguishable from estoppel
which is no
authority at all.”
So
ostensible authority is treated as a form of actual authority, in
contrast to estoppel, which is no authority at all.  As
pointed
out in [110] above that is correct if one is dealing with actual
authority arising by necessary implication.  But
I understand
this case to be dealing with a situation where it is accepted that
there was no authority at all, either express or
implied.  That
was the necessary inference from counsel’s abandonment of
reliance on actual authority during the argument
on Vodacom’s
application for absolution from the instance at the close of Mr
Makate’s case.
[127]
The
foundation for the view expressed in the main judgment is a sentence
in the judgment of Lord Denning in
Hely Hutchinson
CA
[101]
that “
[o]stensible
or apparent authority is the authority of an agent as it appears to
others
”
.
[102]
The main judgment says that this was incorporated into our law
when Schutz JA cited it with approval in
NBS
Bank
,
[103]
but that in doing so Schutz JA mistakenly conflated apparent
authority and estoppel, an error that has been repeated in subsequent

decisions.
[104]
It is said that he did this without any substantiation and in doing
so overlooked that “apparent authority is the agent’s

authority as it appears to others” while “estoppel is not
a form of authority”.
[105]
[128]
There
are two errors in this.  The first arises because in English law
apparent or ostensible authority falls under the broader
rubric of
estoppel and is treated as an instance of estoppel by
representation.  Lord Denning in
Hely- Hutchinson
CA
did
not differentiate apparent authority and estoppel.  The English
law emerges from the two leading cases in England, namely,
Freeman
& Lockyer
[106]
and
Armagas
.
[107]
The latter is the definitive statement of English law on the
point and because it is a judgment of the House of Lords is
binding
on all other courts.  The main judgment mentions
[108]
the Court of Appeal judgment in this case but does not refer to the
decision in the House of Lords. Nor does it refer to the key
passage
where Lord Keith states unequivocally as a matter of English common
law that ostensible authority is nothing more than
estoppel.
[109]
[129]
The
second error lies in the suggestion that treating apparent or
ostensible authority as a form or instance of estoppel was a novel

departure by Schutz JA from the principles applied in our law before
his judgment in
NBS
Bank.
[110]
That is not so.  The consistent view in our law has always
been that apparent or ostensible authority is an instance
of
estoppel.  That is reflected in the cases both prior to and
after
NBS
Bank
and in the academic writing.  The main judgment states
[111]
that there is not a single case referred to in our law that holds
that apparent authority is estoppel before
NBS Bank
and
subsequent decisions that followed it.  My researches have,
however, uncovered a number that did.  Like the main judgment
I
will start with the English law but will need to explore that in
greater detail than does the main judgment.
English
common law
[130]
The
proper approach to the determination of the law of a foreign country
is to examine the authoritative decisions of its courts.
In
England that is the Supreme Court and was formerly the House of
Lords.  It pronounced on the relationship between
ostensible
authority and estoppel in
Armagas
,
[112]
where Lord Keith of Kinkel, giving the opinion of the House, said:
“
Ostensible
authority comes about where the principal, by words or conduct, has
represented that the agent has the requisite actual
authority, and
the party dealing with the agent has entered into a contract with him
in reliance on that representation. The principal
in these
circumstances is estopped from denying that actual authority existed.
In the commonly encountered case, the ostensible authority is
general in character, arising when the principal has placed
the agent
in a position which in the outside world is generally regarded as
carrying authority to enter into transactions of the
kind in
question.  Ostensible general authority may also arise where the
agent has had a course of dealing with a particular
contractor and
the principal has acquiesced in this course of dealing and honoured
transactions arising out of it.”
[113]
(Emphasis added.)
[131]
It
should be unnecessary to delve any further into the English law in
the light of that decision.  If a foreign court were

investigating whether the operation of the
in
duplum
rule
is suspended in South Africa once the plaintiff has instituted
action, that question would be answered in the negative by reference

to this Court’s decision in
Paulsen
.
[114]
One would not expect the foreign court to disregard
Paulsen
in favour of the judgment in
Oneanate.
[115]
That would be inconsistent with the comity that the courts of one
country have for those of another.  But in view of
the fact that
the main judgment does not deal with what was said in
Armagas
and
relies upon an understanding of English law that is inconsistent with
it, I think it is necessary to examine the leading English
cases in
more depth to demonstrate why this leads to error.
[132]
Hely-Hutchinson CA
was
decided in 1967 and is a decision by the Court of Appeal consisting
of three judges, all of whom delivered judgments.
The
ratio
decidendi
of the decision can only be
determined by examining all three.  But first it is necessary to
examine a judgment of the Court
of Appeal handed down four years
before.  That necessity arises because the passage from Lord
Denning’s judgment in
Hely-Hutchinson
CA
relied on in the main judgment
starts as follows:
“
I
need not consider at length the law on the authority of an agent,
actual, apparent or ostensible.  That has been done in
the
judgments of this court in the case of
Freeman
& Lockyer (a firm) v Buckhurst Park Properties (Mangal) Ltd
.”
[116]
It
is therefore apparent that Lord Denning accepted the law as laid down
in the earlier decision.
[133]
In
Freeman
& Lockyer
[117]
the leading judgment was given by Diplock LJ (as he then was).  In
what has subsequently been described by English courts
as a
comprehensive
[118]
and lucid
[119]
exposition of the law, which has also been accepted as correct in
Australia,
[120]
he said:
[121]
“
We
are concerned in the present case with the authority of an agent to
create contractual rights and liabilities between his principal
and a
third party whom I will call ‘the contractor’.  This
branch of the law has developed pragmatically . . .
[b]ut it is
possible (and for the determination of this appeal I think it is
desirable) to restate it on a rational basis.  It
is necessary
at the outset to distinguish between an ‘actual’
authority of an agent on the one hand, and an ‘apparent’

or ‘ostensible’ authority on the other.  Actual
authority and apparent authority are quite independent of one

another. Generally they co-exist and coincide, but either may exist
without the other and their respective scopes may be different.
As
I shall endeavour to show, it is on the apparent authority of the
agent that the contractor normally relies in the ordinary
course of
business when entering into contracts.
An
‘actual’ authority is a legal relationship between
principal and agent created by a consensual agreement to which
they
alone are parties . . . . To this agreement the contractor is a
stranger; he may be totally ignorant of the existence of any

authority on the part of the agent.  Nevertheless, if the agent
does enter into a contract pursuant to the ‘actual’

authority, it does create contractual rights and liabilities between
the principal and the contractor.
.
. .
An
‘apparent’ or ‘ostensible’ authority, on the
other hand, is a legal relationship between the principal
and the
contractor created by a representation, made by the principal to the
contractor, intended to be and in fact acted on by
the contractor,
that the agent has authority to enter on behalf of the principal into
a contract of a kind within the scope of
the ‘apparent’
authority, so as to render the principal liable to perform any
obligations imposed on him by such contract.
To the
relationship so created the agent is a stranger.  He need not be
(although he generally is) aware of the existence
of the
representation.  The representation, when acted on by the
contractor by entering into a contract with the agent, operates
as an
estoppel
, preventing the principal from
asserting that he is not bound by the contract.  It is
irrelevant whether the agent had actual
authority to enter into the
contract.”  (Emphasis added.)
[134]
Diplock LJ thus clearly founded ostensible
authority on estoppel.  So did Pearson LJ in his judgment in
that case where he
said:
“
The
expressions ‘ostensible authority’ and ‘holding
out’ are somewhat vague.  The basis of them, when
the
situation is analysed, is an estoppel by representation.”
[122]
There
can be no doubt that the
ratio
decidendi
of
this case is that ostensible authority is an estoppel by
representation.  That is after all what the judges said.

The main judgment suggests that the first part of the passage from
the judgment of Diplock LJ accurately describes apparent authority,

while the emphasised portion creates confusion because it “introduces
the issue of estoppel, as if it is an integral part
of apparent
authority”.
[123]
But that involves reading the passage through the filter of the
view that apparent authority and estoppel are different concepts.

Absent that filter it states quite clearly that ostensible authority
is a matter of estoppel arising by virtue of a representation
of
authority.
[135]
Diplock
LJ summarised his conclusions in the following terms:
[124]
“
If
the foregoing analysis of the relevant law is correct, it can be
summarised by stating four conditions which must be fulfilled
to
entitle a contractor to enforce against a company a contract entered
into on behalf of the company by an agent who had no actual
authority
to do so.  It must be shown: (a) that a representation that the
agent had authority to enter on behalf of the company
into a contract
of the kind sought to be enforced was made to the contractor; (b)
that such representation was made by a person
or persons who had
‘actual’ authority to manage the business of the company
either generally or in respect of those
matters to which the contract
relates; (c) that he (the contractor) was induced by such
representation to enter into the contract,
ie, that he in fact relied
on it; and (d) that under its memorandum or articles of association
the company was not deprived of
the capacity either to enter into a
contract of the kind sought to be enforced or to delegate authority
to enter into a contract
of that kind to the agent.  The
confusion which, I venture to think, has sometimes crept into the
cases is, in my view, due
to a failure to distinguish between these
four separate conditions, and in particular to keep steadfastly in
mind . . . that the
only ‘actual’ authority which is
relevant is that of the persons making the representation relied on.”
[136]
That
judgment has been repeatedly endorsed in subsequent cases.  I
need mention only two.  In the Court of Appeal in
Armagas
[125]
Robert Goff LJ (as he then was) described it as “the
locus
classicus
on the subject of ostensible authority” and proceeded to
re-affirm that—
“
ostensible
authority
is created by a representation by the principal to the third party
that the agent has the relevant authority, and that the
representation,
when acted on by the third party,
operates
as an estoppel
,
precluding the principal from asserting that he is not bound.”
(Emphasis added.)
On
appeal the House of Lords took the same view as is apparent from the
passage quoted in [130] from Lord Keith’s speech.
[137]
I
have already pointed out that Lord Denning MR himself, in
Hely-Hutchinson CA
,
endorsed the decision in
Freeman
& Lockyer
.
So did Lords Wilberforce and Pearson
[126]
in their concurring judgments.
[127]
That is hardly surprising because Lord Pearson, as a Lord Justice of
Appeal, had concurred in Diplock LJ’s judgment
in
Freeman
& Lockyer
.
And at the risk of being accused of heaping Pelion upon Ossa,
immediately after the passage relied on in the main judgment,

Lord Denning said that on the facts of the case there was actual
implied authority and added:
“
This
finding makes it unnecessary for me to go into the question of
ostensible authority . . . . I do not say that the judge was
in error
in what he said on these subjects.  All I say is that I do not
find it necessary to express any opinion on it.”
The
trial Judge
[128]
had followed Diplock LJ’s statement of the legal position and
the other two members of the Court of Appeal agreed that there
was
actual implied authority in the case.  So the case did not turn
on ostensible or apparent authority at all, nor did it
depart from
the accepted view in England that this falls within the field of
estoppel.
[129]
[138]
I will briefly examine the passage from
Lord Denning MR’s judgment quoting it without the preamble set
out in [132] above.
It reads:
“
[A]ctual
authority may be express or implied.  It is express when it is
given by express words, such as when a board of directors
pass a
resolution which authorises two of their number to sign cheques.
It is implied when it is inferred from the conduct
of the parties and
the circumstances of the case, such as when the board of directors
appoint one of their number to be managing
director.  They
thereby impliedly authorise him to do all such things as fall within
the usual scope of that office.
Actual authority, express or
implied, is binding as between the company and the agent, and also as
between the company and others,
whether they are within the company
or outside it.
Ostensible
or apparent authority is the authority of an agent as it appears to
others.
”
[130]
(As it lies at the heart of the reasoning in the main judgment,
I have like my Colleague italicised the key passage.)
[139]
This cannot be taken as an indication that
ostensible authority is a form of authority or that it is the other
side of the coin
from actual authority.  It exists where the
principal represents, either by words or conduct, that someone has
authority to
enter into a transaction on behalf of the principal.
Where the representation of authority coincides with actual authority

then it is actual authority and nothing more need be said.  It
is only relevant where the representation of authority diverges
from
and is greater than the actual authority.  That much is clear
from the example that follows, of a managing director,
which is
particularly pertinent to the present case, given Mr Knott-Craig’s
role in events.  A person appointed to that
office may have
either the ordinary powers of a managing director, or some more
restricted powers.  But as a result of their
appointment the
company represents them as having the usual powers of a managing
director.  That is the appearance given,
or representation made
(the two expressions are synonymous), to people dealing with the
managing director. And when people deal
with the company relying on
that appearance or representation the company is bound.  That
may be because actual and ostensible
authority coincides, or because
the principal is precluded, that is, estopped, from asserting the
managing director’s lack
of authority.  But they will only
be bound in that case if the other party reasonably acted upon the
representation to their
prejudice.  Were that not so a party
could rely on ostensible authority arising from the appearance of
matters even though
they were aware of the limitation on the managing
director’s authority, for example, because they had been told
that the
contract would have to be referred to the board of directors
for approval.
South
African law
[140]
In
our case law ostensible authority has always been treated as a form
of estoppel, and in my view that is the correct approach
as a matter
of principle.  I need to deal with the suggestion that this was
not so until matters went astray in
NBS
Bank
,
which has been followed in all the recent leading cases in the
Supreme Court of Appeal.
[131]
But no case and no authority is cited prior to
NBS
Bank
that
supports the notion that the latter case involved a deviation from
established principle.  It is not suggested that treating

ostensible authority as a form of authority and not estoppel is a
constitutionally mandated development of the common law.  This

necessitates an examination of the South African authorities.
The earliest judgments I have discovered describing apparent

authority as estoppel are two decisions by Lord de Villiers CJ in
1904 and 1906 respectively.
[132]
In the earlier of these Lord de Villiers CJ said in regard to a plea
of estoppel relating to the authority of a person to
dispose of
shares that:
“
I
am satisfied also that by our law, as by the law of England, a person
who by his conduct has clothed his agent with the apparent
ownership
and right of disposition of a document, whether negotiable or not, is
estopped from asserting his title as against a
person to whom such
agent has sold it, and who received it in good faith, and for value.”
[141]
The
next case of importance is
Strachan
v Blackbeard and Son
.
[133]
It dealt with loans made by Blackbeard and Sons to one McLeod.
Strachan was McLeod’s employer, but had not given
him
authority to borrow money on his behalf.  The claim failed
because Strachan had not represented that McLeod had authority
to
borrow on his behalf.  But all three judges made it clear that
where there was no authority to borrow, whether express
or implied,
the case necessarily had to rest on estoppel.
[134]
Innes J said that the plaintiff could
—
“
make
their case either by proving, expressly or impliedly, that McLeod had
authority to bind the defendant’s credit, or by
establishing
facts which operated to estop the latter from denying the existence
of such authority
–
even though,
in truth, it did not exist.”
[135]
[142]
That
decision was followed in
Monzali
v Smith
,
[136]
where Stratford JA said:
“
To
establish agency by estoppel there are two requisites: first, the
principal sought to be bound must represent by his words or
conduct
that the person professing to bind him has authority to do so, and
secondly, that the person to whom the profession is
made acts on the
faith of the representation to his prejudice.  The rule is
stated in Bowstead on
Agency
(4 edition, art 88) thus: ‘Where any person by words or
conduct, represents or permits it to be represented that another

person has authority to act on his behalf, he is bound by the acts of
such other person with respect to any one dealing with him
as an
agent on the faith of any such representation, to the same extent as
if such other person had the authority which he was
so represented to
have.’  But the representation whether by words or conduct
must be of such a nature that it could
reasonably have been expected
to mislead.  In dealing with estoppel by course of dealing De
Villiers CJ laid down the following
in the case of
Strachan
v Blackbeard & Son
(1910 AD at p
288), (I quote the headnote which, with the omission of the names of
the parties, is substantially what the learned
Judge held):  ‘To
prove a course of dealing which would estop a principal from denying
an authority which, in fact,
he never conferred on his agent and
which could not be legally implied from the nature of the agency, it
is not sufficient to show
that the plaintiff may possibly have been
mislead, but the plaintiff must show that the course of dealings was
of such a nature
that it could reasonably have been expected to
mislead, and that it did in fact mislead him.’”
[143]
This
situation is frequently described as agency by estoppel, although in
truth it is no agency at all.  The point is that
the agent does
not have authority to represent the purported principal, but the
latter is precluded by estoppel from disputing
the agent’s
authority.
[137]
This is, to borrow my colleague’s metaphor, the opposite side
of the coin to actual authority, whether that authority
is actual or
implied.  Is there any basis for thinking that ostensible or
apparent authority is any different from agency
by estoppel?  In
my view there is not.
[144]
There
are a number of references to ostensible authority in the early
judgments of our courts, where it is used as the equivalent
of
implied authority.
[138]
Most of these involved persons in a similar position to the managing
director in
Hely-Hutchinson
and
implied authority was inferred from the position they held in the
affairs of the company or entity concerned.  In these
cases
references to ostensible authority are no more than a misleading way
of describing actual authority and they can accordingly
be
disregarded.  In others the discussion of the concept is only
compatible with it being treated as a species of estoppel
by
representation.
[139]
[145]
The
terms ostensible authority and estoppel were linked by Greenberg J in
West
.
[140]
The plaintiff had given certain shares in pledge to a broker
together with share transfer forms signed in blank.
[141]
The broker dishonestly, and in breach of the pledge, sold and
transferred the shares to innocent third parties.  The
plaintiff
sought their recovery in a vindicatory action.  The action
failed on the basis that the broker had ostensible authority
to sell
the shares, such authority being based on estoppel.  Greenberg J
explained his decision as follows:
“
Estoppel
operates by preventing a person from denying the truth of a
representation he has made.  In the present case the
representation which is relied upon is the representation created
through the documents, namely, that by giving the scrip and the
blank
transfer forms to Hunt, appellant represented that Hunt was
authorised to deal with the shares.  It appears to me that
the
effect of estoppel is that the appellant is not entitled to deny that
he gave this authority which ostensibly he gave
,
with the result that in proceedings to which estoppel applies he is
deemed to have given the authority.  The transaction
is looked
upon as if he has actually given the authority, and as a result of
this authority, combined with the delivery, ownership
to the shares
passes.”
[142]
(Emphasis added.)
In
a further passage on the same page Greenberg J spoke of a situation
where “the purchaser from the agent with ostensible
authority,
has established the estoppel”.  He was specifically
referring to the fact that proof of the ostensible authority,
and
that it had been acted upon, “established the estoppel”.
That would have been wholly unnecessary if the ostensible
authority,
as a form of actual authority involving something less than estoppel,
sufficed to render the principal liable.
[146]
In
another case arising out of the same fraud,
[143]
Centlivres J said in regard to the plea of estoppel:
“
I
cannot do better perhaps than to refer to the authority . . . of
Fuller
v Glynn, Mills, Currie & Co.
[1914 2 KB 168
at 177], where Pickford J, said: ‘I must
therefore consider the principle on which this estoppel rests. In my
view it does
not rest on the mere manual act of signature.  That
act is not an essential element in the estoppel.  Its
importance,
where it exists, is as one step towards placing in the
power and disposition of another an instrument which carries with it
a representation
of authority to that other person to deal with it,
and which when produced to a third person will convey to that third
person that
such an authority exists’.”
[144]
[147]
That
ostensible authority is a manifestation of estoppel by representation
is clear from the judgments in
Insurance
Trust
.
[145]
Broome J said that the legal position is that
—
“
[t]he
plaintiff can only succeed if there were real authority . . . express
or implied, to bind the company, or if there was such
ostensible
authority as to create estoppel.”
[146]
Hathorn
JP said:
“
My
view is that the law relating to the branch of agency, here under
discussion, is perfectly clear, whether it be applied to companies
or
natural persons.  The principal is liable in two cases only.
First, where there is actual authority, express or implied.

Second, where the principal is estopped from denying the authority of
the agent.”
[147]
In
the main judgment it is said that these statements “cannot
reasonably be construed to be authority for the proposition
that
apparent authority is estoppel”.
[148]
I am unable to read them as saying anything else.  Broome J said
that “there was such ostensible authority as
to create an
estoppel”.  Hathorn JP said, in the passage more fully
quoted at n 147 that those two expressions apparent
authority and
ostensible authority “are apt to describe a conception which is
confined to cases of estoppel”. Both
clearly made the point
that ostensible authority falls within the general concept of
estoppel.
[148]
A
similar statement of the position is to be found in the judgment of
Quenèt J in
Clifford
Harris
.
[149]
The relevant passage reads:
“
It
is clear that in contract the principal’s liability to third
parties for the acts of his agent depends either upon the
agent’s
actual authority, express or implied, or upon the agent’s
ostensible authority, that is, in consequence of
a holding-out and,
in such a case, there is said to be an agency by estoppel.”
In
Inter-Continental
Finance
[150]
Botha J said in relation to ostensible or apparent authority that
they are terms used to describe a situation:
“
Where
there is no authority in fact but the principal is estopped from
denying the existence of authority, according to the ordinary

principles of estoppel.  This situation is frequently referred
to as one of agency by estoppel, which is in itself, notionally,
a
misnomer.”
He
went on to point out that the terms ostensible and apparent authority
are also sometimes used to describe situations where express

authority cannot be shown but it can be implied from the conduct of
the principal, and summarised the relevant principles as follows:
“
A
is bound by an agreement purportedly entered into on his behalf by B
with C  if B had authority from A to enter into that
agreement
on A’s behalf, or if A is precluded from denying such authority
by virtue of the principles of estoppel.  Between
actual
authority and estoppel I can perceive no intermediate situation in
which A is bound by B’s agreement with C.”
[151]
[149]
There
is a comprehensive discussion of ostensible authority on the basis of
estoppel in
Connock
.
[152]
But it did not cast doubt on the law as stated in these earlier
cases.  In
Service
Motor Supplies
and
Southern
Life
[153]
the then Appellate Division dealt with the issue on the basis of
estoppel.  And in two cases leading up to
NBS Bank
,
one of which dealt with the same fraud and the same bank manager as
that case, ostensible authority was expressly dealt with on
the basis
of estoppel.
[154]
This was also the stance of the textbook writers.
[155]
[150]
NBS
Bank
was
the first of a number of relatively recent cases in the Supreme Court
of Appeal to deal with these issues.  It concerned
a fraudulent
scheme of taking investments orchestrated by the branch manager of
one branch of the bank.  When the investment
was stolen and the
investor sued the bank it resisted the claim on the grounds of the
manager’s lack of authority.
Giving the judgment of the
court, Schutz JA cited the passage from the judgment of Lord
Denning MR in
Hely Hutchinson
CA
.
[156]
I have dealt
with that fully in the analysis of the English law and need say no
more.
[151]
In
accordance with the lengthy and unbroken line of authorities dealt
with above, Schutz JA placed the question of ostensible authority

squarely within the framework of estoppel.  He said:
[157]
“
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.”
(Emphasis in original.)
[152]
Since
NBS
Bank
the
Supreme Court of Appeal has several times reaffirmed this
approach.
[158]
For present purposes I need quote only two passages.  I do not
do so because it is necessary to add further authority
to show that
ostensible authority (under that name, or when described as apparent
authority, or agency by estoppel) is a form of
estoppel by
representation precluding reliance on a denial of authority.  My
purpose is to stress the point that the representation
founding that
estoppel must be a representation by the principal, either by words
or conduct.  Absent a representation that
draws its authority
from the words or conduct of the principal there can be no estoppel.
This is in harmony with the main
judgment’s acceptance that the
only requirement for a finding that there is ostensible authority is
that “a principal
by words or conduct has created an appearance
that the agent has the power to act on its behalf”.
[159]
I stress the point because we received argument based on the
proposition that a representation by Mr Geissler alone, unsupported

by any representation by Vodacom, should suffice.  These cases
refute that proposition and inform my approach to the facts.
[153]
In
Glofinco
SCA
,
[160]
Nienaber JA said:
“
A
representation, it was emphasised in both the
NBS
cases,
supra,
must
be rooted in the words or conduct of the principal himself and not
merely in that of his agent.  Assurances by an agent
as to the
existence or extent of his authority are therefore of no consequence
when it comes to the representation of the principal
inducing a third
party to act to his detriment.” (Footnotes omitted).
And
in
MEC
for Economic Affairs
,
[161]
Cachalia JA
said:
“
It
is well established that to hold a principal liable on the basis of
the agent’s apparent authority, the representation
must be
rooted in the words or conduct of the principal, and not merely that
of his agent. Conduct may be express or inferred from
the ‘particular
capacity in which the agent has been employed by the principal and
from the usual and customary powers that
are found to pertain to such
an agent as belonging to a particular category of agents’.  It
may also be inferred from
the ‘aura of authority’
associated with a position which a person occupies, at the
principal’s instance, within
an institution.” (Footnotes
omitted).
Conclusion
on ostensible authority
[154]
The
argument before us accepted the analysis of the present state of our
law set out above.  That analysis shows that in English
law
ostensible authority is an estoppel by representation and that the
earlier decisions of our courts that say that ostensible
or apparent
authority is a form of estoppel are correct.  That is also the
view of the academic commentators both here and
overseas.
[162]
This characterisation was not and is not challenged on the
basis that it is inconsistent with the spirit, purport and objects
of
the Bill of Rights.  It should in my opinion be applied in this
case. Therefore, once Mr Makate accepted that Mr Geissler
did
not have actual authority, whether express or implied, to conclude a
contract with him on behalf of Vodacom, he had to show
that Vodacom
made a representation to him that Mr Geissler had the requisite
authority and that he reasonably acted upon it.
[155]
Before leaving the question whether
ostensible authority is a matter of estoppel there are two further
points to be made.
The first is that no difficulty of principle
or practicality arises in characterising ostensible authority as
estoppel.  That
is illustrated by the facts of this case.
The main judgment accepts that there must be a representation by
Vodacom as the
party Mr Makate seeks to bind.  Presumably, as
the basis is misrepresentation, it is a requirement that Mr Makate
should have
relied on that representation.
[156]
It can hardly be suggested that, had Mr
Makate known that Mr Geissler lacked authority, Vodacom would
nonetheless have been bound
on the basis of a representation that did
not influence his conduct, or that it should be held bound by a
contract that he knowingly
concluded with someone lacking authority
to represent Vodacom.  Then there is the twofold requirement of
reasonableness, namely
that the representation must have been one
that Vodacom should reasonably have thought would be relied on and
that Mr Makate reasonably
relied on it.  These do not seem to
pose any difficulty.  If Mr Makate behaved unreasonably it would
be wrong to hold
Vodacom liable for it.  Lastly there is the
issue of prejudice.  That is obvious.  For Mr Makate
to permit
Vodacom to develop his idea in a false belief that he would
be compensated for it plainly redounds to his prejudice.
[157]
The
second point relates to the suggestion that my approach is contrary
to principle and the approach our law takes to the doctrine
of
quasi-mutual assent.
[163]
The example is given of a person who is held liable on a
contract because they reasonably caused the other party to believe

that they were agreeing to conclude a contract with them.
[164]
That has on several occasions been treated as estoppel,
[165]
but in
Saambou
[166]
Jansen JA said that it would lead to greater clarity to distinguish
quasi-mutual assent and the reliance theory of contract from

estoppel.  The problem he was addressing was whether our law of
contract is wholly subjective and based on the existence of
consensus
ad idem
(subjective
agreement, which he referred to as the “wilsteorie” of
contract),
[167]
or whether it includes objective elements, which he described as the
reliance theory.  This bears no resemblance to the issue
that
arises in relation to the authority to conclude a contract.  In
the former case the issue is a single one of whether
there is any
contract at all.  In the latter there is a contract, but one of
the parties claims that the person purporting
to represent it lacked
authority to contract.  This involves two separate enquiries,
namely, whether there was express or
implied authority and, if not,
whether there was ostensible authority.  Whatever reasons there
may be for distinguishing between
quasi-mutual assent and the
objective approach to whether a contract was concluded, they have no
bearing on the issue of ostensible
authority.  The two
situations are not in my view comparable.
Source
of the representation
[158]
The focus of the enquiry must turn to the
issue of representation.  There can be no doubt that Mr Makate
acted upon the belief
that Mr Geissler had authority to conclude a
contract with him.  In view of his position in the company –
and despite
some suggestions in argument that as an employee he ought
to have known that this was not the case – it was reasonable
for
him to rely upon any such representation.  So the crucial
issue is whether Vodacom made such a representation to Mr Makate.
[159]
The primary submission by Mr Makate’s
legal advisers is that the requirement that the representation must
be that of Vodacom
and not Mr Geissler stated the requirements too
stringently, for reasons I will discuss shortly.  Only in the
alternative
was it contended on constitutional grounds that it should
be relaxed in the case of a person in Mr Makate’s position.

The scope of such relaxation was not clearly defined in their
submissions and amounted to little more than a contention that on
the
facts of this case Mr Makate should be held to have discharged the
onus of proving ostensible authority and, to the extent
that in
strict law he had not done so, the strict law should be relaxed.
[160]
That
is not a satisfactory basis upon which to ask this Court to discharge
its constitutional function of developing the common
law so as to
ensure that it accords with the spirit, purport and objects of the
Bill of Rights.  Such a process requires in
the first place a
clear understanding and exposition of the current state of the common
law as it applies to the problem at hand
and a precise identification
of the manner in which it is suggested that it should be
developed.
[168]
We cannot simply overthrow the existing law – which the
Constitution explicitly preserved, subject to its being consistent

with the Constitution
[169]
– because a particular case evokes sympathy or because of the
disgraceful conduct of a party.  Notoriously, hard cases
make
bad law.  Constitutional development of the law, as our
jurisprudence demonstrates, requires that changes to existing
law be
articulated with the same clarity as the rules and principles that
they replace.  When urging this Court to develop
the common law
it is appropriate for legal practitioners to bear this in mind and
seek to formulate the development they propose
with the greatest
possible clarity.
[161]
I do not see the need for any development
of the common law along the lines suggested by counsel.  I agree
with counsel that
in some of the cases it has been stated too
stringently and without necessary qualification.  I also agree
that in this case
the trial judge erred by following that overly
stringent approach.  The statements that say or indicate that
the representations
of the agent cannot be taken into account at all,
fail to take account of the fact that companies can only make
representations
through natural persons who themselves have authority
to represent them.  That requires in any particular case that
the court
examine closely how authority was exercised in the company
sought to be held liable in order to ascertain whose conduct was
authorised
and whose representations would bind the company.  It
goes without saying that this exercise may be complex and that the
actions
of various different people will need to be taken into
account in the analysis.
[162]
A
helpful starting point is the judgment of Lord Pearson in
Hely Hutchinson CA
,
[170]
where this very problem was explored.  Lord Pearson said:
“
There
is, however, an awkward question arising in such cases how the
representation which creates the ostensible authority is made
by the
principal to the outside contractor. There is this difficulty.  I
agree entirely with what Diplock LJ said . .
.  that such
representation has to be made by a person or persons having actual
authority to manage the business.  Be
it supposed for
convenience that such persons are the board of directors.  Now
there is not usually any direct communication
in such cases between
the board of directors and the outside contractor.  The actual
communication is made immediately and
directly, whether it be express
or implied, by the agent to the outside contractor.  It is,
therefore, necessary in order
to make a case of ostensible authority
to show in some way that such communication which is made directly by
the agent is made
ultimately by the responsible parties, the board of
directors.  That may be shown by inference from the conduct of
the board
of directors in the particular case by, for instance,
placing the agent in a position where he can hold himself out as
their agent
and acquiescing in his activities, so that it can be said
that they have in effect caused the representation to be made.  They

are responsible for it and, in the contemplation of law, they are to
be taken to have made the representation to the outside contractor.”

(Footnote omitted.)
[163]
Frequently,
as in that case, the conduct constituting the representation will be
the conduct (not the claims to authority) of the
purported agent.
The reason is that, when one is concerned with the ostensible
authority of a managing director, the conduct
conveying to the
outside world that the incumbent has the authority in issue is almost
inevitably that of the managing director.
In that sense at
least some of the representation is to be found in the conduct of the
agent.  This is a point that Robert
Goff LJ made in
Armagas
CA
:
[171]
“
Diplock LJ
confined his analysis to ostensible authority of an agent to bind his
principal to a contract.  I, for my part,
can see no reason why
the same principles should not be applicable to other acts by an
agent, for example the making of representations
by the agent,
provided that it is clearly understood that, to give rise to
ostensible authority,
the
representation by the principal must be to the effect that the agent
is authorised to make the representation on his, the principal’s,

behalf, so that the third party is entitled to rely on it as such.
On this basis, a representation by an agent within his
ostensible authority may give rise to an estoppel against his
principal.”
(Emphasis added.)
[164]
I
agree with that analysis.
[172]
It follows that the strict approach postulated by Nienaber JA in
Glofinco
SCA
[173]
must be qualified.  Insofar as the agent has actual authority to
make representations on behalf of the principal those
representations,
even as to the agent’s own authority will bind
the principal.  Equally, if the agent has ostensible authority
to make
those representations and a third party acts on them to their
prejudice, they will bind the principal on the basis of estoppel.

The aura of authority created by the principal, both by its actions,
but also by its acceptance of the acts of its employees, is
the
central consideration.
[165]
In
summary the position in regard to representations of authority
founding a claim of ostensible authority is the following.  The

statements or conduct constituting the representation must be those
of persons, individually or collectively,
[174]
who have actual authority to bind the principal to the transaction in
dispute.  The conduct may include the appointment of
an
individual to a position ordinarily carrying with it a particular
level of authority.  If the appointment is made, but
some of
that authority is withheld or subjected to limitations, it is
essential that this is made clear to persons dealing with
that
individual.  Otherwise they will be entitled to hold the company
to the representation of authority created by the appointment.

A representation may also be made by permitting the putative agent to
engage in a course of dealing on behalf of the principal.

Representations by the agent alone without more are insufficient,
whatever form they may take.  But the conduct and statements

relied upon may be those of the agent, provided the conduct or
statements are themselves within the actual or ostensible authority

of the agent.  The statements and conduct must, when taken as a
whole, be such as reasonably to convey to a person dealing
with the
agent the impression that they have authority to conclude the
transaction in question, and thereby to induce the belief
in that
person that they have that authority.
[166]
The issue of Mr Geissler’s ostensible
authority must therefore be viewed not only in terms of his positive
conduct and that
of others, but also in the light of the overall
picture of the sources of authority created by Vodacom in relation to
the conduct
of its business and the identity of those to whom it
delegated authority to act on its behalf and represent it in the
conclusion
of a contract of the type in issue.  Against that
background I turn to deal with the facts.
Was
ostensible authority proved?
[167]
The source of authority in a company such
as Vodacom is principally the board of directors.  While there
are some matters,
such as the disposal of the business of the
company, which can only be undertaken with the approval of the
shareholders, in general
it is the board of directors that is
responsible for the conduct of the business of the company.  But
in a modern company,
as was the case with Vodacom, the board of
directors consists of both executive and non-executive directors.
The executive
directors are usually those who are critically involved
in the day to day operations of the company.  The most important
of
these will be the CEO and the chief financial officer (CFO).
The non-executives are usually in the majority and play more
of an
oversight role, ensuring that the executives perform to shareholders’
expectations and overseeing their actions and
the strategic direction
of the company.  And it is for the board to fix the parameters
of the authority of the executives
and especially the authority of
the CEO.
[168]
In this case the CEO was Mr Alan
Knott-Craig.  He is an unusual individual.  There can be
few CEO’s of public companies
in South Africa whose lives and
performance in that role have warranted the production of an
autobiography.  But Mr Knott-Craig
had achieved what few
others had done, at an exciting time in this country’s history
in a period of extraordinary technological
development in the world.
Mobile telephony is a relatively recent development.  Most
people, not only in South Africa,
but elsewhere, have probably
not owned a mobile phone for much more than twenty years.  Yet,
as we see everyday, they have
become not just ubiquitous but an
essential item in modern life.  Vodacom is one of two or three
major suppliers of mobile
telephony services in South Africa and
elsewhere on the African continent.  It is a giant company.
And in large measure
it was created and has achieved its current
eminence as a result of the vision, drive and energy of Mr
Knott-Craig.
[169]
So
what was the extent of Mr Knott-Craig’s authority?  He was
the Group CEO of the holding company of Vodacom and the
Executive
Chairman of the operating company.  He was in many ways the
founder and guiding spirit of Vodacom through its early
years.
In the eyes of the public he was Vodacom.  And someone who
regarded his contribution as worthy of an autobiography
was not
someone who stood quietly in the background waiting for things to
happen.  The clear impression is that he was the
driving force
behind the company.  Of course he had to account for his running
of the company to its board of directors and
ultimately its
shareholders, but so long as it was a success, as it undoubtedly was,
it is improbable that the board would have
stood in the way of any
project that he had approved.  In the trial Court in
Hely-Hutchinson
QBD
[175]
Roskill J described the role of the managing director in that case in
the following terms:
“
Sometimes,
I daresay, the directors persuaded him to take or to refrain from
taking a particular step; no doubt, like any wise chief
executive, he
sought and obtained advice before he made up his mind; but in all
these cases the final decision . . . rested with
him and with nobody
else”.
That
description seems apt in relation to Mr Knott-Craig.
[170]
This point is well illustrated by the
launch of “Please Call Me”.  Mr Knott Craig
approved the launch
of the product without waiting for board
approval.  The launch was reported to the meeting of the Vodacom
Group Directing
Committee on 15 March 2001, by which stage the
product had been launched and was generating thousands of calls a
day.  Mr
Knott-Craig, the CFO (Mr Crouse) and the managing
director of the network company, Mr Mthembu, were at that meeting by
invitation.
The report they tabled suggested that the planned
implementation date would be 31 March 2001.  But by
then the product
had been rolled out and was enjoying success.
Not only had all employees been told of the roll-out in a general
email from
Mr Geissler sent on 9 February 2001, but in the
company’s in-house magazine for March 2001 Mr Mthembu
congratulated
Mr Makate on his initiative and his idea.
[171]
The inescapable conclusion is that if Mr
Knott-Craig approved a project that project would be undertaken.
And if he approved
of a new product that product would be launched in
the marketplace.  This would occur without any need to obtain
board approval
for the product.  No doubt if it involved
substantial capital expenditure that would have had to be put to the
board for its
approval, but that was not the case with “Please
Call Me”, at least in its initial stages.
[172]
In that light it seems to me that Mr
Knott-Craig had, if not actual authority, at least ostensible
authority to agree to remunerate
Mr Makate for his idea.  He
testified that there was a delegation of authority document that was
the company’s “bible”
on authority to which strict
adherence had to be paid.  All contracts had to be scrutinised
by the Group Board.  But
this evidence appears to have been led
in the context of Mr Makate’s claim to a revenue share,
which Mr Knott-Craig
said could never be approved.  That may
well have been so, but it is no answer to the more general claim to
reasonable remuneration.
Nor is it a full answer to the
validity of the agreement to compensate Mr Makate for his idea.
While the amount of any compensation
might well, if large, have had
to be approved by the Board that does not necessarily mean that no
agreement for compensation could
be concluded.  All it meant was
that the scope for negotiating such compensation was possibly
restricted and subject to further
approval.
[173]
But Vodacom objects that there is no
evidence that Mr Knott-Craig or other executives and board members
were even aware of the possibility
of Mr Makate wanting to be
remunerated for his idea.  On the probabilities, at least in
respect of Mr Knott-Craig, I
do not accept that this was the
case and nor did the trial Court.  Mr Knott-Craig was the
chief executive.  Mr Mthembu,
the managing director of the
operating company reported to him, as did Mr Geissler.  Given
the nature of the “Please
Call Me” idea and its potential
importance for the company in the future, it is inconceivable that he
was unaware of it before
the launch of the product.  And the
evidence shows that he was fully aware of it.
[174]
Mr Muchenje testified that the reason he
directed Mr Makate to Mr Geissler was because a project would not be
put before the executive
before it had received product approval.
In other words it required product approval before being put to
Mr Knott-Craig
for his imprimatur.  On 24 January 2001
Mr Geissler approved the product development plan.  That
document revealed
potential revenues in round figures of between
R239 000 and R322 500 per day.  Even for Vodacom that
was a significant
amount.  Five days later Mr van der Watt, the
finance director of the network company, reported to Mr Crouse, the
CFO Director,
on the financial implications of “Please Call
Me”.  In the memorandum he noted that he understood that
“Alan”,
that is, Mr Knott-Craig, had given instruction
for urgent consideration of the service and to launch it after Board
approval.
That was not refuted by Mr Knott Craig,
save that the product was launched, at least on a limited basis,
without board
approval.  The probabilities are overwhelming that
Mr Knott-Craig was intimately involved in the roll-out of “Please

Call Me”.
[175]
But would he have known of Mr Makate’s
desire, over and above any public congratulations, to be remunerated
for his idea?
Again resort must be had to the probabilities.
The evidence of Mr Muchenje was that Mr Geissler was close to
Mr Knott-Craig
and was one of the executives who had access to
him if required.  Mr Geissler knew from the outset that Mr
Makate was
seeking remuneration and had indicated that he wanted a
revenue share.  In those circumstances it is improbable that Mr
Geissler,
in introducing this exciting new product to Mr Knott-Craig,
would not have told him of its provenance and of Mr Makate’s
desire to be remunerated therefor.  Mr Knott-Craig’s
evidence was restricted to saying that he could not remember
whether
he was told of this.  That was a weak response in the
circumstances. Why would Mr Geissler not tell him this important

fact?  After all, the only basis upon which Vodacom was entitled
to use Mr Makate’s idea was that he would be remunerated
for
it.  A flat rejection of any payment of remuneration would have
led Mr Makate to look elsewhere to exploit his idea.
As Mr
Geissler knew that, there is every reason to believe that Mr
Knott-Craig also knew.
[176]
This
is not speculation.  At least two people know the true story and
they are Mr Geissler and Mr Knott-Craig.  (There
are possibly
others within Vodacom but like Mr Geissler they have said nothing.)
Of these two, Mr Geissler did not give evidence
and Mr Knott-Craig
was a poor, and in some respects plainly dishonest, witness.  A
court does not in those circumstances draw
the inference most
favourable to the party that called or could have called these
witnesses.  It examines the overall probabilities,
which include
the absence of credible evidence from the one party.  That is
how the then Appellate Division approached a similar
case in
Pirie
[176]
and that, in my view, is how this Court must approach this case.
In addition the information known to the executives of Vodacom

concerning their authority and how it was exercised in the company
was not a matter within Mr Makate’s knowledge.  It
was
within the exclusive knowledge of Mr Knott-Craig, Mr Geissler and
possibly other executives.  In those circumstances it
is a
long-established principle of our law of evidence that less evidence
will be required from the plaintiff to discharge the
onus of
proof.
[177]
[177]
The implications of Mr Knott-Craig being
aware of Mr Makate’s demands are considerable.  If he
wished to reject them
several things had to occur.  Most
importantly Vodacom could not develop and launch the product without
agreeing to them.
Its only basis for adopting the idea and
using it to create the “Please Call Me” product was that
it would remunerate
Mr Makate.  So, if Mr Knott-Craig was aware,
as I hold him to have been, of Mr Makate wanting to be remunerated,
his failure
to reject that notion and instruct Mr Geissler to do so
is only consistent with his representing to Mr Makate that he
accepted
it.  Crucial to a rejection of Mr Makate’s demand
was that Mr Knott-Craig, or Mr Geissler on his behalf, had to tell
Mr
Makate that he would not be paid for his idea.  Neither did so.
In fact the opposite occurred.  Mr Geissler
told Mr Makate that
everything depended upon the technical and commercial viability of
the idea, but once this had been established
he would discuss the
matter of his reward with Mr Knott-Craig.
[178]
I find it impossible to accept that
throughout this period Mr Geissler was deliberately stringing Mr
Makate along with promises
of payment and a promise that he would
discuss the basis for it with Mr Knott-Craig, while concealing that
from Mr Knott-Craig.
That would be inconsistent with the
evidence as to the relationship between the two men.  The only
proper conclusion is that
Mr Knott-Craig knew what was demanded and
knew what promises Mr Geissler was making to Mr Makate to ensure that
he co-operated
with the development and roll-out of “Please
Call Me”.  To have done otherwise would have put the
entire project
at risk.  Various scenarios come to mind, all of
them adverse to Vodacom’s interests.  If Mr Makate had
been told
that Vodacom intended to go ahead with “Please Call
Me” without paying him anything, he might have consulted
lawyers
and sought an interdict.  He might have found ways of
going over Mr Knott-Craig’s head to the board of directors.

He might have gone to the press.  The risk of reputational
damage to the company was considerable.  So steps needed to
be
taken to ensure his co-operation.  That was the effect of Mr
Geissler’s agreement and his promises once the product
was a
success to discuss rewards with Mr Knott-Craig.
[179]
I do not accept that the company would not
have concluded a contract with an employee in order to procure the
advantage of a profitable
idea.  While I accept that it would
not have concluded an agreement on a revenue share basis, I do not
accept that it would
not have agreed to pay an employee, who
generated, in his spare time and outside the scope of his ordinary
duties, a highly profitable
idea for a new product, a reasonable
remuneration commensurate with the financial benefit enjoyed by the
company.  In fact
the article in the company newsletter urged
employees to come up with good ideas in the way that Mr Makate had
done.  The
suggestion that this was precluded because it was
“against the policy and practice” of Vodacom is
improbable and unbusinesslike.
Vodacom’s business
involves the exploitation of profitable concepts in the
telecommunications industry.  To say that
it would not contract
with an employee, who offered on a contractual basis to make such a
concept available to it, because it was
against its policy and it
would not deal with an employee as it would deal with an outsider,
flies in the face of common sense.
In the words of the old saw,
it is cutting off one’s nose to spite one’s face.
[180]
Starting from the premise that Mr
Knott-Craig had either actual or ostensible authority to agree to
remunerate Mr Makate for his
idea, there is no reason why he could
not use Mr Geissler as his agent, in turn, to engage with Mr Makate.
That was entirely
compatible with the corporate hierarchy.
Mr Makate was no longer dealing with his seniors via the agency
of Mr Muchenje.
Instead he was in direct communication with a
member of the board of the network company who in turn had the ear of
the CEO.
Mr Makate would not expect Mr Knott-Craig to deal
directly with him.  He would expect that his dealings with the
upper echelon
of the company would come through others, and in this
case it was through a very senior individual.  The internal
hierarchy
of the company reinforced the representation in regard to
Mr Geissler’s ostensible authority.
[181]
Mr Makate did not say that he questioned Mr
Geissler’s authority or that Mr Geissler made any express
representations
to him about the scope of that authority.  Nor
did he tell him that his authority to agree to Mr Makate’s
demands was
limited.  Any such statement would inevitably have
caused alarm bells to ring.  This is not therefore a situation
of
reliance on assurances of authority by an unauthorised agent.
It is a case of reliance on the conduct of those senior in the

company’s hierarchy that cloaked Mr Geissler with the
appearance of authority to conclude the agreement that he did with
Mr
Makate.  Once I reject, as I do, the contention that Mr
Knott-Craig was unaware of what was being discussed between Mr

Geissler and Mr Makate the chain of ostensible authority from the
board to Mr Geissler is complete and the estoppel is established.
[182]
To summarise.  Mr Makate had to prove
that Vodacom represented to him that Mr Geissler had the necessary
authority to conclude
the agreement for remuneration with him.
The necessary source of authority had to be the main board.  For
the reasons
given above I hold that the board represented to the
world, including Mr Makate – one is almost inclined to say
that
the representation to employees would have been even stronger
than the representation to the world outside the company – that

Mr Knott-Craig had authority to conclude such an agreement on behalf
of the company.  He may have had actual authority, but
for
present purposes it is sufficient to say that it was represented that
he had authority, in other words, ostensible authority.
And
that authority extended to authorising others to act on his behalf.
[183]
The next link in the chain lies in the
relationship between Mr Knott-Craig and Mr Geissler.  Their
closeness was well-known
within the company and it is improbable that
Mr Geissler would have concealed from Mr Knott-Craig what he was
doing with and saying
to Mr Makate.  That is reinforced by the
very public knowledge that Mr Knott-Craig wanted to speed up the
launch of this product
as shown in Mr van der Watt’s
memorandum to Mr Crouse.  Combined with this was the fact that
Mr Geissler was a
director of the network company and the head of
product development.  He was therefore more than a mere
subordinate in relation
to Mr Knott Craig.  He was
both a confidant and a person likely to be entrusted to act on his
behalf.
[184]
So Mr Knott-Craig had ostensible authority
in his own right to conclude the contract and also had ostensible
authority to invest
Mr Geissler with the same authority.  Once
it is accepted that he knew in substance what was happening between
Mr Geissler
and Mr Makate and did nothing to make it clear to Mr
Makate that no agreement could be concluded without reference to
higher authority
in Vodacom, that created the classic situation of
knowingly permitting someone to exercise an authority they did not
have.
That is what occurred. The consequence is that Mr
Geissler had ostensible authority to conclude a contract with Mr
Makate and Vodacom
is estopped from denying that authority.  It
is bound by the contract Mr Geissler concluded on its behalf.
Prescription
[185]
The
onus of proving prescription rests on the party asserting it.
[178]
Vodacom pleaded that Mr Makate’s claims were based on “an
oral commercial contract” and that his “claims
and debt
according to his allegations” became due prior to
13 July 2005.  No attempt was made to spell out
the
nature of the debt that was said to have prescribed.  In
Vodacom’s heads of argument reference is made generally
to “a
contractual debt” and to Mr Makate pursuing his claim at any
time after “Please Call Me”
was shown to be
successful.  Vodacom noted that the only relief being sought at
the trial was an order that Vodacom negotiate
with Mr Makate to
determine a reasonable remuneration for the right to use his idea.
It said, without elaboration, that the
alleged obligation to
negotiate was a debt in terms of
sections 10
,
11
and
12
of the
Prescription Act 68 of 1969
.  The plea of prescription must be
viewed against this background.
[186]
The main judgment holds that the obligation
that Mr Makate seeks to enforce in this case is not a debt within the
meaning of that
term in the
Prescription Act.  I
agree.  In
my view the plea of prescription is not established in this case for
the simple reason that on the established
meaning of “debt”
the obligation in issue – an obligation to negotiate a
reasonable remuneration – is not
a debt at all.  Until
those negotiations reach a conclusion there will be nothing that is
due by Vodacom to Mr Makate and
nothing in respect of which he is
able to make any claim.  The
Prescription Act provides
for debts
to be extinguished by prescription, as they would be by payment or
performance.  But as yet nothing exists that
can be extinguished
and participation in negotiations will not extinguish any
obligation.  One can test that by asking at
what point in time
the obligation would be extinguished as a result of negotiating.
There was accordingly no debt that was
due prior to the commencement
of the present litigation and there could accordingly be no question
of prescription.  I will
briefly deal with my reasons for
reaching that conclusion.
[187]
Section
10
of the
Prescription Act provides
for a “debt” to be
extinguished by prescription.  In terms of
section 12(1)
prescription begins to run when the debt is due.  The meaning
that has been given to the word “debt” since the
Prescription Act came
into force has been in accordance with the
definition in the New Shorter Oxford Dictionary,
[179]
namely:
“
1.
Something owed or due: something (as money, goods or service)
which one person is under an obligation to pay or render to
another.
2.
A liability or obligation to pay or render something; the condition
of being so obligated.”
[180]
I agree
with the main judgment that if the statement in
Desai
[181]
that debt “has a wide and general meaning, and includes an
obligation to do something or refrain from doing something”
was
intended to extend this meaning, that was an error.
[182]
[188]
The
correlative of a debt in this sense is a right of action vested in
the creditor in which the payment of money, or the delivery
of goods,
or the rendering of services is claimed.  And, when payment,
delivery or the rendering of services extinguishes
the debt, the
right of action is likewise extinguished.
[183]
That is why
section 12(1)
of the
Prescription Act provides
that
prescription will commence to run once the debt is due.  If the
debt is not due then prescription cannot run. Debts become
due when
they are immediately claimable or recoverable.
[184]
[189]
Not
all rights of action give rise to debts.  That is well
illustrated by the recent decision in
Keet
.
[185]
Based on an ambiguous and obiter statement in the first instance
Court in
Evins
[186]
it had been said in a series of cases in the Supreme Court of
Appeal
[187]
that a vindicatory claim, that is, a claim to assert a right of
ownership in an asset, gave rise to a debt capable of being
extinguished
by extinctive prescription under
section 10
of the
Prescription Act.  This
occasioned confusion because the owner
would remain the owner of the asset, but would not be entitled to
exercise its rights of
ownership against the possessor thereof.
In effect it would be deprived of its rights of ownership by way of
extinctive prescription,
whereas the loss of the right of ownership
by way of prescription is a matter of acquisitive prescription, which
is dealt with
in Chapter I and
sections 1
to
5
of the
Prescription
Act, not Chapter
III and
sections 10
to
12
of that Act.
[190]
The Court in
Keet
overruled these earlier cases and held
that acquisitive prescription dealt with the acquisition (and
corresponding loss) of real
rights such as ownership, while
extinctive prescription dealt with the extinguishment of debts and
their correlative rights of
action, in other words, with personal
rights.  The relevance of the case to the present one is that it
illustrates that not
every right to approach a court for relief will
amount to a debt for the purposes of extinctive prescription.
So the right
to claim delivery of the motor vehicle in that case did
not give rise to a “debt” for the purposes of extinctive
prescription
in terms of
section 10
of the
Prescription Act.
[191
]
It will be apparent from this that,
depending on their source, rights of action directed at the same
purpose and seeking identical
relief may in one case give rise to a
debt for the purposes of prescription and in another not.  For
example a right to claim
occupation under a lease is a personal right
and the obligation to satisfy that right by delivering possession of
the property
leased will be a debt capable of prescribing.  But
a claim to possession of the same property arising from a registered
right
of
usus
or
habitatio
will
not.
[192]
In
the case of a continuing wrong there can be no question of
prescription even though the wrong arises from a single act long in

the past.  The reason, which may appear somewhat artificial, but
which is well established, is said to be that while the original

wrongful act may have occurred at a past time the wrong itself
continues for so long as it is not abated.
[188]
But the running of prescription in respect of any financial claim
arising from the same wrong will not be postponed.  Accordingly,

if financial loss was occasioned by the original wrongful act, the
debt in relation to that loss would become due and prescription
would
commence to run when the original wrongful act occurred and loss was
suffered.
[189]
The result is that the impact of prescription on claims having their
source in the same right may differ depending on the
nature of the
claim.
[193]
The
issue in the present case is whether any debt in this sense arose
until after the parties had negotiated in regard to Mr Makate’s

remuneration and either reached an agreement or referred the issue
for determination by Mr Knott-Craig or his replacement as CEO.

This may have a parallel with the provision sometimes encountered in
construction contracts, and apparently a consistent feature
of
standard form commodity contracts,
[190]
that requires, as a pre-requisite to any claim arising, that the
claimant must obtain an arbitration award, with the result that
the
very existence of a claim depends on the outcome of the
arbitration.
[191]
This is not the same as the more commonly encountered situation where
the parties simply agree that any disputes they may
have about the
validity of existing claims will be determined by arbitration.  Where
the contract contains a
Scott
v Avery
clause,
as these are known, no cause of action justiciable in the ordinary
courts can arise until after arbitration has taken place.
[192]
In other words, the parties by their agreement ensure that a claim
will only arise after a particular event has occurred.
[194]
In
this case, once agreement had been reached on the remuneration due to
Mr Makate, he would have had a right of action to
recover that
remuneration from Vodacom.  That would have been a debt in
respect of which prescription would have run.
But no such
agreement has been reached.  The parties have not yet arrived at
the point where there is anything that is, “
owed
or due: something (as money, goods or service) which one person
is under an obligation to pay or render to another”
.
If they had, then Vodacom ought by its own actions to be able to
discharge what is owed.  But it cannot.  Vodacom
could not
extinguish its liability by paying Mr Makate for the simple reason
that the amount it will be liable to pay has not been
determined.
If it were to tender payment of an amount and Mr Makate accepted it
that would resolve the dispute, but as a
result of a compromise
concluded by the parties,
[193]
not as a result of payment of the debt.
[195]
This
led Vodacom to submit that the obligation on Vodacom to negotiate
remuneration is itself a debt for the purposes of prescription.

But, if so, it is a debt of a very unusual kind.  As Corbett JA
said in
Evins
[194]
and Van Heerden JA said in
Oertel
,
[195]
a debt is the correlative of a right of action and when one is
extinguished so is the other.  That is why debt has been defined

by reference to the means by which the debtor can discharge it,
namely payment, or the delivery of goods, or the provision of
services.
[196]
The obligation that underlies the existence of the debt must be one
that is capable of being discharged by one or other of
these means.
But doing so is not possible here because there is nothing
determinate in existence that can be discharged by
payment, the
delivery of goods or the rendering of services.
[196]
I do
not think that
Duet
and Magnum
[197]
on which Vodacom relied is of any assistance here.  The case
concerned liquidators seeking to set aside, under section 32
of the
Insolvency Act
[198]
,
dispositions made prior to the liquidation of the close corporation.
The question was whether their right to do so and recover
the amount
of the payments was a debt for the purposes of prescription.
The argument on behalf of the liquidators was that
a debt would only
come into existence once the court set aside the dispositions and
ordered that the amounts in issue be repaid.
But, as the Court
correctly held, that was to confuse the process whereby the
liquidators would be enabled to recover the debt
with the debt
itself.  The right being enforced was the right to obtain a
declaration that the beneficiary of the dispositions
should repay
them.  Once obtained that would give rise to a further right to
obtain payment of a money debt.  But the
first right was a debt
in that it could be extinguished by payment.  The recipient of
the dispositions was under no obligation
to wait for a court order in
order to repay what he had received and had he done so the
liquidators’ right would have been
extinguished. While there
are some remarks in the judgment
[199]
that might be construed as suggesting that any right that can found a
cause of action is necessarily encompassed by the word “debt”

they were not addressed to the present situation and should not be
regarded as affecting it.
[197]
Likewise,
I do not find anything in
Cape
Town Municipality
[200]
that bears upon the present problem.  The question that arose in
that case was whether the commencement of an action, seeking
a
declaratory order that an insurer was liable to indemnify the
insured, had the effect of judicially interrupting prescription
in
terms of
section 15
of the
Prescription Act in
respect of a claim for
payment of the amount of the indemnity.  Having drawn attention
to the different senses in which “debt”
is used in
different sections of the
Prescription Act, the
Court held that the
claim for a declaration that the insurer was obliged to indemnify the
insured had interrupted the running of
prescription, even though such
an order is not susceptible of execution in terms of
section 15(4)
of
the
Prescription Act.
[198
]
The
obligation of Vodacom to negotiate with Mr Makate concerning the
remuneration to which he is entitled for coming up with the
idea
underlying “Please  Call Me” can only be
fulfilled by undertaking such negotiations.  That will
not
involve the payment of money, the delivery of goods or the rendering
of services.  All those presuppose that the debtor
can discharge
the debt by what are in essence unilateral actions on its part.
[201]
The obligation cannot therefore be extinguished by conduct by Vodacom
on its own.  The negotiations will involve the
active
participation of Mr Makate.  On both sides they will require
conduct that is bona fide and reasonable.  None of
that is
consistent with the simple concept of a debt and its discharge.
[199]
The
present situation is unusual but that is what renders the issues
worthy of the attention of this Court.  It is unlikely
to be one
that is much encountered in practice.  But in my view the right
that Mr Makate has is one of that probably small
category of rights
that do not constitute a debt for the purposes of prescription.
It is far more akin to the right to claim
rectification of a contract
that was held not to be a debt for the purposes of prescription in
Boundary
Financing Ltd
,
[202]
than it is to a debt in the sense in which that expression has
hitherto been understood.  In any event Vodacom, on whom the

onus lay, has not persuaded me that it is a debt.  Accordingly I
would dismiss the plea of prescription.
Conclusion
[200]
For those reasons I concur in the order
proposed in the main judgment.
For
the Applicant:
C Puckrin SC, G Marcus SC, R Michau SC and
S Budlender i
nstructed by Stemela &
Lubbe Inc
For
the Respondent:
SA
Cilliers SC, M Chaskalson SC, RA Solomon SC, A Macmanus i
nstructed
by Leslie Cohen & Associates
[1]
In addition
he sought delivery of a statement of account and debatement of such
account as well as ordering Vodacom to pay him
15% of revenue
generated by the “Please Call Me” service.
[2]
68 of 1969.
[3]
Mr Makate’s
particulars of claim alleged that Vodacom was represented by both Mr
Geissler and Mr Muchenje.
[4]
Makate v
Vodacom (Pty) Ltd
[2011] ZAGPJHC 241;
2014 (1) SA 191
(G) (High Court judgment) at
paras 73-4.
[5]
Id at para
74.
[6]
Id at para
80.
[7]
Id at para
87.
[8]
Harms,
Amler’s
Precedents of Pleadings
6 ed (LexisNexis, Durban 2007) (
Amler
)
at 166-7.
[9]
High Court
judgment above n 4 at paras 165 and 173.
[10]
Id at para
181.
[11]
Desai NO
v Desai
[1995]
ZASCA 113; 1996 (1) SA 141 (A).
[12]
LTA
Construction v Minister of Public Works and Land Affairs
[1993]
ZASCA 149; 1994 (1) SA 153 (A).
[13]
Section
39(2)
provides:
“
When
interpreting any legislation, and when developing the common law or
customary law, every court, tribunal or forum must promote
the
spirit, purport and objects of the Bill of Rights.”
[14]
Desai
and
LTA
Construction
above n 11 and 12.
[15]
High Court
judgment above n 4 at para 77.
[16]
See
R
v Dhlumayo and Another
1948 (2) SA (A) and the authorities referred to therein.
[17]
Bitcon v
Rosenberg
1936
AD 380
at 396-7.
[18]
Powell &
Wife v Streatham Nursing Home
1935
AC 243
at 265.
[19]
Bernert
v
Absa Bank Ltd
[2010] ZACC
28
;
2011 (3) SA 92
(CC);
2011 (4) BCLR 329
(CC) at para 106.
[20]
Above n 8.
[21]
The
applicant’s particulars of claim alleged:
“
The
Defendant (Respondent) was represented by Mr Muchenje and Mr P.
Geissler (hereinafter referred to as the representatives)
who were
then occupying the positions of Head of Finance Divisions and the
Director of Product Development respectively, in the
employ of the
Defendant.  The representatives were acting in the course and
scope of employ with the Defendant.
The
representatives had ostensible authority to negotiate and to
contract for and/or on behalf of the Defendant
.”
[22]
South
African Broadcasting Corporation v Coop and Others
[2009]
ZASCA 30
;
2006 (2) SA 217
(SCA) and
NBS
Bank Ltd v Cape Produce Company Pty Ltd and Others
[2001] ZASCA 107
;
2002 (1) SA 396
(SCA) (
NBS
Bank)
.
[23]
Kerr
Law
of Agency
4
ed (LexisNexis Butterworths, Durban 2006) at 27.
[24]
NBS
Bank
above n 22;
Northern
Metropolitan Local Council v Company Unique Finance (Pty) Ltd
[2012] ZASCA 66
;
2012 (5) SA 323
(SCA) ;
South
African
Broadcasting Corporation
above n 22 and
Glofinco
v Absa Bank
[2002] ZASCA 91
;
2002 (6) SA 470
(SCA) (
Glofinco
SCA
).
[25]
Hely-Hutchinson
v
Brayhead
Ltd and Another
[1968] 1 QB 549
(CA) (
Hely-Hutchinson
CA
)
at 583 A-G.
[26]
Aris
Enterprises (Finance) (Pty) Ltd v Protea Assurance Co Ltd
1981 (3) SA 274
(A).
[27]
NBS Bank
above n 22 at para 25.
[28]
Monzali
v Smith
1929 AD 382
at 386.
[29]
NBS
Bank
above n 22 at para 25.
[30]
Id at para
26.
[31]
South
African Broadcasting Corporation
above n 22 at para 63.
[32]
NBS
Bank
above n 22 at para 11.
[33]
Id at paras
32-3.
[34]
South
African Broadcasting Corporation
above n 22 at paras 74-5.
[35]
West v
Pollak and Freemantle
1937
TPD 64.
[36]
Insurance
Trust & Investments v Mudaliar
1943
NPD 45
(
Insurance
Trust
).
[37]
Concurring
judgment at [145] – [147].
[38]
Spes
Bona Bank v Portals Water Treatment
1983
(1) SA 978 (A) at 984;
Benjamin
v Gurewitz
1973 (1) SA 418
(A) at 425 and
Peri-Urban
Areas Health Board v Breet NO
1958 (3) SA
783 (T).
[39]
Be Bop A
Lula Manufacturing & Printing CC v Kingtex Marketing (Pty) Ltd
[2007] ZASCA 162
;
2008 (3) SA 327
(SCA) at para 10 and
Sonap
Petroleum (South Africa) (Pty) Ltd v Pappadogianis
[1992] ZASCA 56; 1992 (3) SA 234 (A).
[40]
Rabie
The
Law of Estoppel in South Africa
2
ed (B
utterworth
Publishers (Pty) Ltd Cape Town 2000)
at
10-1.
[41]
Saambou-Nasionale
Bouvereniging v Friedman
1979 (3) SA
978 (A) (
Saambou
).
[42]
Kerr above
n 23 at 26-8.
[43]
Freeman
& Lockyer (a firm) v Buckhorst Park Properties (Mangal) and
Another
[
1964
]
1
All
ER
630.
[44]
Armagas
Ltd v Mundogas SA: The Ocean Frost
[1985] 3 All ER 385
(
Armagas
CA
).
[45]
Insurance
Trust
above n 36 at 61.
[46]
High Court
judgment at paras 181-3.
[47]
Id at para
2.
[48]
Id at para
181.
[49]
Desai
above n 11 at 146I.
[50]
Id at
144H-147A.
[51]
LTA
Construction
above n 12 at 849H.
[52]
Desai
above n 11 at 146I.
[53]
Section
39(2)
above n 13.
[54]
Electricity
Supply Commission v Stewarts and Lloyds of SA (Pty) Ltd
1981 (3) SA 340
(A) (
Escom
)
at 344E -G.
[55]
The New
Shorter English Dictionary
3 ed (Clarendon Press, 1993) vol 1 at 604.
[56]
Oertel
en Andere NNO v Direkteur van Plaaslike Bestuur en Andere
1983 (1) SA 354
(A) at 370B-C;
Joint
Liquidators of Glen Anil Corporation Ltd (in liquidation) v Hill
Samuel
(SA)
Ltd
1982 (1) SA 103
(A) at 110A-B.
[57]
Desai
above n 11 at 146H-J.
[58]
It appears
that the SCA may have so construed it in
Absa
Bank Limited v Keet
[2015]
ZASCA 81
;
2015 (4) SA 474
(SCA) at para 12.
[59]
Investigating
Directorate; Serious Economic Offences and Others v Hyundai Motor
Distributors (Pty) Ltd and Others In re: Hyundai
Motor Distributors
(Pty) Ltd and Others v Smit NO and Others
[2000] ZACC 12
;
2000 (1) BCLR 1079
(CC);
2001 (1) SA 545
(CC) at
para 21.
[60]
Fraser v
ABSA Bank Limited
[2006] ZACC 24
;
2007 (3) SA 484
(CC);
2007 (3) BCLR 219
(CC) at para
43.
[61]
Id at para
47.
[62]
Road
Accident Fund and Another v Mdeyide
[2010] ZACC 18
;
2011 (2) SA 26
(CC);
2011 (1) BCLR 1
(CC) (
Road
Accident Fund
)
at para 10.
[63]
South
African Transport and Allied Workers Union (SATAWU) and Others
v
Moloto
NO
and Another
[2012]
ZACC 32
;
2012 (6) SA 249
(CC);
2012 (11) BCLR 1177
(CC) at para 44.
[64]
Letaba
Sawmills (Edms) Bpk v Majovi (Edms) Bpk
[1992] ZASCA 195; 1993 (1) SA 768 (A).
[65]
Southernport
Developments (Pty) Ltd v Transnet Ltd
[2004]
ZASCA 94
;
2005 (2) SA 202
(SCA) (
Southernport
Developments)
.
[66]
Premier
of the Free State Provincial Government and Others v Firechem Free
State (Pty) Ltd
[2000] ZASCA 28
;
2000 (4) SA 413
(SCA) (
Firechem
Free State
).
[67]
Id at para
35.
[68]
Southernport
Developments
above
n 65 at para 8.
[69]
Everfresh
Market Virginia (Pty) Ltd v Shoprite Checkers (Pty) Ltd
[2011]
ZACC 30
;
2012 (1) SA 256
(CC);
2012 (3) BCLR 219
(CC) (
Everfresh
).
[70]
Id at para
72.
[71]
Biowatch
Trust v Registrar Genetic Resources and Others
[2009] ZACC 14
;
2009 (6) SA 232
(CC);
2009 (10) BCLR 1014
(CC)
(
Biowatch
).
[72]
The terms
“apparent authority” and “ostensible authority”
are interchangeable and to avoid pointless repetition
I will
generally refer to ostensible authority, as does the main judgment.
The particulars of claim referred to ostensible
authority.
[73]
See
Hely-Hutchinson
CA
above n 25.
[74]
Broekman
v TCD Motors (Pty) Ltd
1949 (4) SA 418
(T);
Grosvenor
Motors (Potchefstroom) Ltd v Douglas
1956 (3) SA 420
(A);
Johaadien
v Stanley Porter (Paarl) (Pty) Ltd
1970
(1) SA 394
(A);
Kajee
v HM Gough (Edms) Bpk
1971 (3) SA 99
(N); and
Quenty’s
Motors (Pty) Ltd v Standard Credit Corporation Ltd
[1994] ZASCA 41
;
1994 (3) SA 188
(A).
[75]
Oakland
Nominees (Pty) Ltd v Gelria Mining & Investment Co (Pty) Ltd
1976 (1) SA 441 (A).
[76]
Electrolux
(Pty) Ltd v Khota and Another
1961 (4) SA 244
(W);
Pretorius
v Loudon
1985 (3) SA 845
(A); and
Konstanz
Properties (Pty) Ltd (Edms) v Wm Spilhaus en Kie (WP) Bpk
[1996]
ZASCA 28
;
1996 (3) SA 273
(A).
[77]
One Stop
Financial Services (Pty) Ltd v Neffensaan Ontwikkelings (Pty) Ltd
and Another
2015 (4) SA 623
(C) at para 25.
[78]
Oriental
Products (Pty) Ltd v Pegma 178 Investments Trading CC and Others
[2010] ZASCA 166; 2011 (2) SA 508 (SCA).
[79]
These were
in order of seniority, the Group Financial Director, the managing
and financial directors of the network operating
company, Vodacom
(Pty) Ltd, and the Group Director of Product Development and
Management.
[80]
In similar
circumstances in
Legg
& Co v Premier Tobacco Co
1926
AD 132
at 137 Solomon JA remarked:
“
It
is a remarkable and very unsatisfactory feature of the case that
Levenson, the man with whom the alleged agreement was made,
though
he was available as a witness, was deliberately kept out of the box
by the respondent company.  Throughout the cross-examination
of
appellants’ witnesses, they were told from time to time by
counsel for the respondent company that Levenson would say
this and
that, yet when the time came to make good these statements, Levenson
was not called.  A party is, of course, free
to put in the box
only such witnesses as he pleases, but in a case like the present,
where it is stated in the plea that the
agreement alleged to have
been made with Levenson was not in fact made, and further that
Levenson had no authority to bind the
company by any such agreement,
it is certainly very remarkable that he should not have been called
to substantiate the defence.
It is not an unreasonable
inference to draw, in such circumstances, that Levenson was unable
to contradict the clear and
specific evidence of Legg.”
If
one substituted Mr Geissler for Levenson and Mr Makate for Legg in
that passage it would be entirely applicable to the present
case.
[81]
See [37]
above.
[82]
There are
others, such as the email sent by Mr Geissler to Mr Makate on 8
March 2001 falsely accusing him of having stolen the
idea from a
competitor of Vodacom.
[83]
See
Southernport
Developments
above
n 65.
[84]
See
Everfresh
above n 69.
[85]
As was done in
NBS
Bank
above
n 22 at para 9.
[86]
As was done in
South
African Broadcasting Corporation
above
n 22 at para 63.
[87]
See
Amler
above n 8 at 166-7.
Edition
7 (2009) is unchanged at 195-6.
[88]
Mann v Sidney Hunt Motors
(Pty) Ltd
1958 (2) SA 102
(G) at 105E-F.  Counsel in that case disavowed reliance on
estoppel but said he was seeking to invoke a principle “akin

to estoppel”.
[89]
Citing
Inter-Continental
Finance & Leasing Corp (Pty) Ltd v Stands 56 and 57 Industria
Ltd
1979 (3) SA 740
(W) at
749 (
Inter-Continental
Finance
) and
Beyleveld
NO v Southern Life Association Ltd
1987
(4) SA 238
(C) at 248.
[90]
Cadac
(Pty) Ltd v Weber-Stephen Products Co and Others
[2010]
ZASCA 10
;
2011 (3) SA 570
(SCA) at para 10.
[91]
Daniels
Beck’s Theory
and Principles of Pleading and Civil Actions
6 ed (Butterworths, Durban 2002) at 199.
[92]
Sonnekus
The Law of
Estoppel
2 ed
(Butterworths, Durban 2000) at 23-5, where the author makes the
point that estoppel must be pleaded, but does not say that
it can
only be pleaded by way of a replication.
[93]
Id at 159.
[94]
Birkett LJ in
Combe v Combe
1951 (2) KB 215
at 224.
[95]
Turner
Spencer Bower and
Turner The Law Relating to Estoppel by Representation
3
ed (Butterworths, London, 1977) at para 5.
[96]
Union
Government v National Bank of South Africa Ltd
1921 AD 121
at 128 (
Union
Government
).
[97]
Id.
[98]
See [44]
above.
[99]
See [45]
above.
[100]
See [46] above.
[101]
Hely-Hutchinson
CA
above
n 25 at 102.
[102]
Emphasis
added.
[103]
NBS Bank
above
n 22 at para 25.
[104]
See [
50]
above.
[105]
See [52] above.
[106]
Freeman
& Lockyer
above
n 43
.
[107]
Armagas
Ltd v Mundogas SA (The Ocean Frost)
[1986] 2
All ER 385
(HL) (
Armagas
)
at 389-90.
[108]
See [76] and [77] above.
[109]
Id at 389I.
[110]
NBS Bank
above
n 22.
[111]
See [70] above.
[112]
Armagas
above n 107
at 389-90. See also
Inland
Revenue Commissioners v Ufitec Group Ltd
[1977]
3 All ER 924
at 937 and
Hely-Hutchinson
v Brayhead Ltd and Another
[1967] 2
All ER 14
(QBD) (
Hely-Hutchinson
QBD)
at
23
.
[113]
Armagas
above n 107
at
389-390.
[114]
Paulsen and Another v Slip
Knot Investments 777 (Pty) Ltd
[2015] ZACC 5
;
2015 (3) SA 479
(CC);
2015 (5) BCLR 509
(CC)
(
Paulsen
).
[115]
Standard
Bank of South Africa Ltd v Oneanate Investments (Pty) Ltd (in
Liquidation)
[1997] ZASCA 94
;
1998 (1) SA 811
(SCA) (
Oneanate
).
[116]
Hely-Hutchinson
CA
above
n 25 at 102.
[117]
Freeman
& Lockyer
above
n 43.
[118]
Beloff
v Pressdram Ltd and Another
[1973]
1 All ER 241
(ChD) at para 256.
[119]
Hely-Hutchinson
QBD
above
n 112 at para 23.
[120]
Northside
Developments (Pty) Ltd v Registrar-General
[1990] HCA
32
;
(1990) 170 CLR 146)
in particular Brennan J paras 5-18, Dawson
J  paras 14-20 and 31 and Toohey J at para 4.
[121]
Freeman
& Lockyer
above n 43 at 644.
[122]
Id at 641.
[123]
See [78] above.
[124]
Id at 646.
[125]
Armagas
CA
above
n 44 at 795.
[126]
It is not
clear why two Law Lords sat with the Master of the Rolls in a case
in the Court of Appeal.  But it is noteworthy
that the
judgments in question were all delivered by extremely distinguished
judges all of whom were either members of, or went
on to become,
members of the House of Lords.  It is unclear on what basis
this Court can depart from their firmly expressed
views on the
content of English law.
[127]
Hely-Hutchinson
CA
above
n 25 at 104 and 108-9.
[128]
Roskill J,
himself also, at a later stage, a Law Lord.
[129]
See Spencer
Bower and Turner above n 95 at 181-2 in dealing with the
relationship between estoppel and agency the authors say:
“
Such
cases are most often dealt with as forming a part of the substantive
law of agency … and in many of them the word
‘estoppel’
may be looked for in vain, and expressions such as ‘holding
out’ and ‘apparent’
and ‘ostensible’
authority being preferred; but … the legal consequences of
such ‘holding out’,
‘appearance’ or ‘ostent’
are none other than those which result from the application of the
principles
of estoppel to the representation thereby constituted.”
See
also Halsbury’s
Laws of England
, 5 ed (Butterworth,
London) vol 1, para 25; Handley
Estoppel by Conduct
(Thomson
and Sweet & Maxwell, London 2006) at 9-001 to 9-004; and
Fridman,
The Law of Agency
7 ed (Butterworths, London 1996)
at 122-3.
[130]
Hely-Hutchinson
CA
above
n 25 at 102.
[131]
NBS Bank
above
n 22
;
South African Broadcasting Corporation
above
n 22;
and
Northern Metropolitan Local Council
above
n 24 at para 28.
[132]
Van
Blommenstein v Holliday
(1904)
21 SC 11
at 17 and
In
Re
Reynolds
Vehicle and Harness Factory Limited
(1906)
23 SC 703
at 712.
[133]
Strachan v Blackbeard and
Son
1910 AD 282.
[134]
Id at 287
per
De Villiers CJ and
at 295-6 per Solomon J.
[135]
Id
at
290.
[136]
Monzali
above
n 28 at 385. See also the classic statement on estoppel by
Watermeyer JA in
Union
Government v Vianini Ferro-Concrete Pipes (Pty) Ltd
1941 AD 43
at 48 that
—
“
[w]here
one person (the representor) has made a representation to another
person (the representee) in words, or by acts and conduct,
or (being
under a duty to the representee to speak or act) by silence or
inaction, with the intention (actual or presumptive),
and with the
result, of inducing the representee on the faith of such
representation to alter his position to his detriment,
the
representor, in any litigation which may afterwards take place
between him and the representee, is estopped, as against the

representee, from making, or attempting to establish by evidence,
any averment substantially at variance with his former
representation,
if the representee at the proper time and in the
proper manner objects thereto.”
Further
authority for that proposition can be found in
Rossouw and
Steenkamp v Dawson
1920 AD 173
;
Baumann v Thomas
1920 AD
428
; and
Union Government
above n 96.
[137]
See for example,
Lucey &
Co Ltd v Martial & Son
1931
NPD 47
at 56;
Peddie and
Drummond v Heydorn
1913
OPD 102
at 104; and
Quinn
and Co Ltd v Witwatersrand Military Institute
1953
(1) SA 155
(T) at 159E G.
[138]
Acutt v
Seta Prospecting and Developing Co Ltd
1907
TS 799
at 819;
Norwich
Union Life Insurance Society v Dobbs
1912
AD 484
at 491;
Turner,
Visser & Co v Minister of Defence
1916
CPD 84
;
Klopper
v Van Rensburg
1920
EDL 239
;
Kahn
v Leslie and Son
1928
EDL 416
at 418-9; and
Baldachin’s
Trustees v Sloman & Sloman
1944
SR 55.
[139]
Adam v
Mocke
1906
23 SC 782
;
Central
South African Railways v James
1908
TS 221
at 231-2;
Welgedacht
Exploration Co Ltd v Transvaal and Delegoa Bay Investment Co Ltd
1909
TH 90
at 103 and 106; and
Coetzee
v Kakamas Labour Colony Committee
1927
CPD 417.
[140]
West
above n 35.
[141]
This was in
the days prior to dematerialised shares and the implementation of
the STRATE system by the Johannesburg Stock Exchange.
[142]
West
above n 35
at 68.
[143]
West v De Villiers
1938
CPD 96.
[144]
Id at
103-5.
[145]
Insurance
Trust
above
n 36
.
[146]
Id at 58.
[147]
Id at 61-3.
Hathorn JP added the following explanation of the confusion that may
arise in this area:
“
The
law in England seems to me to be in a state of confusion, especially
as applied to companies. There are signs that the same
confusion,
borrowed from England, is finding its way into our law. Unless
precision of thought and expression are insisted upon
in South
Africa in this branch of the law, principles which are simple and
plain will become clouded.
It
is easy to see what causes the confusion. First of all, lawyers are
inclined to forget that cases of actual authority are totally

different from cases of estoppel. In the former, the simple question
is, had the agent actual authority, express or implied?
In the
latter, the enquiry is, did the person sought to be bound as
principal make a representation to the person seeking to bind
him,
in such circumstances as, by an application of the principles of
estoppel, the person sought to be bound is estopped from
denying the
authority of the agent.
It is obvious that in cases of estoppel
the question whether there was actual authority, express or implied,
is not a major issue.
If the facts involved in that question are
relevant at all, they are only relevant as evidence to prove the
estoppel.
The
second cause of confusion is the habit, in which Judges are inclined
to indulge, of using the same facts to base a conclusion
that there
is implied authority as they would use to base a conclusion that
there is an estoppel.
.
. .
The
third cause of confusion is the use of the expressions ‘apparent
authority’ or ‘ostensible authority’
in
conjunction with actual authority, express or implied. I venture to
suggest that the first two phrases are apt to describe
a conception
which is confined to cases of estoppel, that is, the conception of
the authority of a supposed agent to act for
a supposed principal,
when in fact there is no actual authority or when the fact that
there is actual authority is not a major
issue. But unfortunately
the phrases are often used in cases of actual authority.”
(Emphasis added.)
[148]
See [71]
above.
[149]
Clifford Harris (Rhodesia)
Ltd and Another v Todd NO
1955
(3) SA 302
(SR) (
Clifford
Harris
) at 303F-H. See
also
Tuckers Land and
Development Corporation (Pty) Ltd v Perpellief
1978
(2) SA 11
(T) at 14C-E and 18H-19A.
[150]
Inter-Continental
Finance
above
n 89 at 748B-C.
[151]
Id at 748 E-G.
[152]
Connock’s
(SA) Motor Co Ltd v Sentraal Westelike Ko-operatiewe Maatskappy
Bpk
1964 (2) SA 47 (T)
(
Connock’s
)
at 49A-53B.
[153]
Service
Motor Supplies (1956) (Pty) Ltd v Hyper Investments (Pty) Ltd
1961
(4) SA 842
(A) (
Service
Motor Supplies
)
and
Southern
Life Association Ltd v Beyleveld NO
1989
(1) SA 496
(A) (
Southern
Life
).
See also
Poort
Sugar Planters (Pty) Ltd v Minister of Lands
1963
(3) SA 352
(A) at 364;
Dicks
v South African Mutual Fire and General Insurance Co Ltd
1963
(4) SA 501
(N) at 506H-509G; and
Rosebank
Television & Appliance Co (Pty) Ltd v Orbit Sales Corporation
(Pty) Ltd
1969
(1) SA 300
(T) at 304F-305B.
[154]
African
Life Assurance Co Ltd v NBS Bank Ltd
2001 (1) SA 432
(W) at 451E-H;
Glofinco
v ABSA Bank Ltd (t/a United Bank) and Others
2001
(2) SA 1048
(W) at 1064A-B (
Glofinco
HC
)
describing “[t]he requirements for establishing ostensible or
apparent authority or agency by estoppel”.
[155]
Kerr
The
Law of Agency
3
ed (Butterworths, Durban  1991) at 112-148; De Villiers and
Macintosh
The
Law of Agency in South Africa
3
ed (Juta, Cape Town 1981) at 119; Joubert
Die
Suid-Afrikaanse Verteenwoordigingsreg
(Juta,
Cape Town 1979) at 109-15; De Wet and Yeats “
Kontraktereg
en Handelsreg”
4
ed  (Butterworths, 1978) at 101, a paragraph that appears in
each of the earlier editions; Wille and Millin’s
Mercantile
Law of South Africa
18 ed (Hortors, Johannesburg 1984) at 466-8, repeating in substance
what appears in earlier editions and Wille’s
Principles
of South African Law
9 ed (Juta, Cape Town 2007) at 991 also repeating in substance what
appears in earlier editions.
[156]
Hely-Hutchinson
CA
above n 25 at 101-2.
[157]
NBS Bank
above n 22 at para 25.
[158]
South
African Eagle Insurance Co Ltd v NBS Bank Ltd
[2001] ZASCA 118
;
2002 (1) SA 560
(SCA);
Glofinco
SCA
above
n 24 at para 13;
South
African Broadcasting Corporation
above
n 22 at paras 64-6;
MEC
for Economic Affairs, Environment and Tourism v Kruizenga
[2010] ZASCA 58
;
2010 (4) SA 122
(SCA) (
MEC
for Economic Affairs
)
at paras 15-6;
Northern
Metropolitan Local Council
above
n 24 at paras 28-9.
[159]
See [46]
above.
[160]
Glofinco
SCA
above
n 24 at para 13.
[161]
MEC for
Economic Affairs
above n 158
at para 16.
[162]
The sole exception I have found in South Africa is
Kerr
The
Law of Agency
above
n 23 at 26-31 and 94-126 where the author seeks to draw a
distinction between apparent authority and estoppel.  But
this
is a very curious endeavour.  The reason is that in the third
edition (above n 154) the author treated apparent authority
as part
of the law of estoppel.  See pages 112-7 where he said that:
“the language of the courts is the language of
estoppel”.
He then dealt at length with the different requirements to be
extracted from
Monzali
,
which is expressly based on estoppel.  In the fourth edition,
subject to moving a few paragraphs in which he discussed
the general
principles of estoppel before dealing with
Monzali
,
he repeats the contents of the earlier edition, including the
exposition of
Monzali
,
under the heading of “Apparent authority” (at 94-107).
After this he re-inserts the deleted sections on estoppel
(at
109-113) and applies to this concept the very same rules he derived
from
Monzali
.
It is unclear what is to be made of this.  No reason is given
for saying that principles of law that in the third edition
applied
to estoppel are no longer applicable to that subject, but now relate
to a different concept of apparent authority.
It is even more
puzzling when he says that the applicable cases are the same in both
fields and the same principles apply in
both.  If two legal
concepts are established by the same authorities and have identical
principles then they are the same
and calling them by different
names does not alter that
.
[163]
See [72] to [74] above.
[164]
The rule reflects the generally objective approach that South
African law adopts to the existence of a contract as embodied in
the
well-established principle stated by Wessels CJ in
South
African Railways and Harbours v National Bank of South Africa Ltd
1924
AD 704
at 715-6:
“
The
law does not concern itself with the working of the minds of parties
to a contract, but with the external manifestation of
their minds.
Even, therefore, if from a philosophical standpoint the minds of the
parties do not meet, yet, if by their acts
their minds seem to have
met, the law will, where fraud is not alleged, look to their acts
and assume that their minds did meet
and that they contracted in
accordance with what the parties purport to accept as a record of
their agreement. This is the only
practical way in which courts of
law can determine the terms of a contract.”
This
approach is consistent with the oft-quoted statement by Blackburn J
in the English case of
Smith v Hughes,
(1871) LR 6 QB 597
at 607
which
has been consistently and repeatedly followed by our courts:
“
[W]hatever
a man’s real intention may be, [if] he so conducts himself
that a reasonable man would believe that he was assenting
to the
terms proposed by the other party, and that other party upon that
belief enters into the contract with him, the man thus
conducting
himself would be equally bound as if he had intended to agree to the
other party’s terms.”
[165]
Van Ryn
Wine and Spirit Co v Chandos Bar
1928
TPD 417
at 424;
Peri-Urban
Areas Health Board v Breet NO
1958 (3) SA 783
(T) at 790A-G; and
Benjamin
v Gurewitz
1973
(1) SA 418
(A) at 425E-G.
[166]
Saambou
above
n 41 at 1002C-E.
[167]
Id
at
993D-F.
[168]
Mighty
Solutions CC t/a Orlando Service Station v Engen Petroleum Ltd and
Another
[2015]
ZACC 34
;
2016 (1) SA 621
(CC);
2016 (1) BCLR 28
(CC) at para 38.
[169]
Item
2(1)(b) of schedule 6 to the Constitution.
[170]
Hely-Hutchinson
CA
above note 25 at 108-9.
[171]
See
Armagas
CA
above
n 44 at 795.
[172]
I consequently disagree with its rejection by the High Court of
Australia in
Crabtree-Vickers
Pty Ltd v Australia Direct Mail Advertising & Addressing Co Pty
Ltd
[1975] HCA 49
;
(1975)
133 CLR 72
at para 15. See Handley above n 127 at 137, who likewise
criticises the decision.  The High Court of Australia accepted
Freeman & Lockyer
as
the authority on this point.  So did the Supreme Court of
Canada in
Canadian
Laboratory Supplies Ltd v Engelhard Industries of Canada Ltd
[1979]
2 SCR 787
at 797 and 815. In that case, Laskin CJ said (at 800):
“
I
do not subscribe to the proposition, in so far as it purports to be
a general statement of the law, that a representation by
an agent
himself as to the extent of his authority cannot amount to a holding
out by the principal. It will depend on what it
is an agent has been
assigned to do by his principal, and an overreaching may very well
inculpate the principal”.
[173]
See
Glofinco
SCA
above
n 24.
[174]
Such as a board of directors.
[175]
Hely-Hutchinson
QBD
above n 112 at 21.
[176]
Pirie v
Frankel
1936
AD 397.
[177]
Union Government (Minister
of Railways) v Sykes
1913
AD 156
at 173-4 and
Marine
& Trade Insurance Co Ltd v Van der Schyff
1972 (1) SA 26
(A) at 39G-H.
[178]
Gericke v Sack
1978
(1) SA 821
(A) at 827H.
[179]
This meaning was first adopted in
Escom
above n 54 at 344E-G. It was followed thereafter in
Joint
Liquidators of Glen Anil Development Corporation Ltd (in
liquidation) v Hill Samuel (SA) Ltd
1982
(1) SA 103
(A) at 110A-B;
Oertel
above n 56 at 370B-C; and
Cape Town Municipality and
Another v Allianz Insurance Co Ltd
1990
(1) SA 311
(C) (
Cape Town
Municipality
) at 330F-H.
[180]
Above n 54 at 604.
[181]
Desai
above
n 11 at 146H-J.
[182]
See [93] above.
[183]
Evins v Shield Insurance Co
Ltd
1980 (2) SA 814
(A) at
842E-F.
[184]
Deloitte Haskins &
Sells Consultants (Pty) Ltd v Bowthorpe Hellerman Deutsch (Pty) Ltd
[1990] ZASCA 136
;
1991 (1) SA 525
(A) at
532G; approved in this Court in
Road
Accident Fund
above n 62
at para 13.
[185]
Keet
above
n 58
.
[186]
Evins v Shield Insurance Co
Ltd
1979 (3) SA 1136
(W)
at 1141F-G.
[187]
Barnett
and Others v Minister of Land Affairs and Others
[2007]
ZASCA 95
;
2007
(6) SA 313
(SCA);
Grobler
v Oosthuizen
[2009] ZASCA 51
;
2009 (5) SA 500
(SCA) at para 18 and
Leketi
v Tladi NO and Others
[2010]
ZASCA 38
;
[2010] 3 All SA 519
(SCA) at paras 8 and 21.
[188]
Barnett
above
n 187 at para 20 and
Slomowitz
v Vereeniging Town Council
1966
(3) SA 317 (A).
[189]
Oslo
Land Co Ltd v The Union Government
1938
AD 584
at 590 and
Engelbrecht
v Road Accident Fund and Another
[2007]
ZACC 1
;
2007
(6) SA 96
(CC);
2007 (5) BCLR 457
(CC) at paras 21-2.
[190]
B v S
[2011]
EWHC 691
(Comm); [2011] Lloyd’s Rep 18.
[191]
Scott v Avery
10
ER 1121 (1856); 25 LJ Ex 308; 5 HLC 811.
[192]
Sutton &
Gill
Russell on
Abitration
22 ed (Sweet &
Maxwell, London 2003) at paras 2-16.
[193]
Eke v Parsons
[2015]
ZACC 30; 2015 (11) BCLR 1319 (CC).
[194]
Evins
above n 183.
[195]
Oertel
above
n 56.
[196]
De Wet & Yeats above n 155 at 1, where the authors explain the
nature of an
obligatio
.
[197]
Duet and Magnum Financial
Services CC (in liquidation) v Koster
[2010]
ZASCA 34
;
2010 (4) SA 499
(SCA) (
Duet
and Magnum
).
[198]
24 of 1936
[199]
Duet and Magnum
above
n 197 at
paras 22, 24 and 27.
[200]
Cape
Town Municipality
above n 179.
[201]
I do not mean by this to suggest that payment is not a bilateral
juristic act. See
Vereins-
und Westbank AG v Veren Investments and Others
[2002]
ZASCA 36
;
2002 (4) SA 421
(SCA).
All
that I intend to convey is that payment can usually be effected by
way of conduct on the part of the debtor alone.  As
with
delivery of goods and the rendering of services that is always
subject to the creditor accepting the discharge of the debt
in this
way but in most instances that is a formality.
[202]
Boundary Financing Ltd v
Protea Property Holdings (Pty) Ltd
[2008]
ZASCA 139
;
2009 (3) SA 447
(SCA) at paras 12-4.  This Court has
not yet resolved the question whether prescription runs in respect
of a debt owed by
an organ of state in executing its public
functions. See
Njongi v MEC
Department of Welfare, Eastern Cape
[2008] ZACC 4
;
2008 (4) SA 237
(CC);
2008 (6) BCLR 571
(CC) at paras
42-3.