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Last Updated: 4 September 2004
THE SUPREME COURT OF APPEAL
OF SOUTH
AFRICA
Case number : 219/03
In the matter between :
CONCOR
HOLDINGS (PTY) LTD
t/a CONCOR TECHNICRETE APPELLANT
and
HERMANUS PHILLIPUS POTGIETER RESPONDENT
CORAM : SCOTT, ZULMAN, FARLAM, CONRADIE, CLOETE JJA
HEARD : 21 MAY 2004
DELIVERED : 28 MAY 2004
ORDER: In paragraph [14]
Summary: Estoppel by conduct as defence to rei vindicatio ─ requirements for representation clarified.
JUDGMENT
CLOETE JA/
CLOETE JA:
[1] The
sole issue in the present appeal is whether the appellant is estopped from
vindicating paving stones of which it is the owner
and which are in the
respondent’s possession. The magistrate held that it is not. The Pretoria
High Court (Botha J, Patel J
concurring) reversed the decision but granted leave
to appeal to this court.
[2] The facts fall within a small compass. The
appellant manufactures and supplies paving stones. One of its customers was a
builder,
Mr Van Dyk, who traded as Polokwane Homes. The builder purchased the
paving stones from the appellant. The purchase was governed
by the following
clause in the appellant’s standard credit application form which had
previously been completed by the builder:
‘The ownership in the goods
supplied shall remain vested in the supplier until date of payment. The supplier
shall be entitled
to repossess all goods not paid for.’
The appellant
knew, through its salesman Mr Uys who concluded the contract with the builder
for the purchase of the paving stones,
that they were going to be used by the
builder to cover the parking area for a building and that they were required
with some urgency
for that purpose. The building site was owned by the
respondent, with whom the builder had concluded a contract for the erection
of
the building and for paving of the adjacent parking area. As Uys knew, the
colour chosen for most of the paving stones from samples
taken by him to the
site and shown to the respondent, was ‘apricot’, to match the
building. Some of the paving stones
were collected by the builder from the
appellant’s premises and some were delivered by the appellant directly to
the site.
They were laid on site, which involved a number being cut to fit the
terrain and layout and a consequential high degree of wastage
resulted. The
respondent formally admitted at the trial that the paving stones remained
movables. The respondent paid the builder
for the works executed by him, which
included the paving stones. He testified that had he been aware of the
reservation of ownership
clause, he would have ensured that the appellant was
paid, and this evidence was not challenged. The builder did not pay the
appellant
and his estate was sequestrated.
[3] The appellant brought a
rei vindicatio against the respondent for the return of the paving
stones. The respondent countered with a plea of estoppel.
[4] The
respondent was not represented before this court, but did not concede the merits
of the appeal. The primary question raised
by the appellant’s counsel was
whether the appellant made a representation which could found an estoppel. The
court a quo reasoned as follows:
‘Ek vind dit moeilik om in te
sien watter ander indruk die eiser kon geskep het, deur plaveistene op ‘n
bouperseel aan
‘n boukontrakteur af te lewer, stene wat getoets is om in
kleur by ander stene aan te pas, as dat die kontrakteur ten minste
by magte was
om oor die stene te beskik. Die enigste logiese afleiding onder die
omstandighede was dat die kontrakteur die stene
op die perseel vir die bouheer
sou installeer. Onvermydelik het dit die gevolg gehad dat hy in die proses die
stene aan die bouheer
verkoop het. Daar was tussen die verweerder en die
kontrakteur geen sprake van ‘n voorbehoud van eiendomsreg nie... Die eiser
het geen kennis gedra van wat die reëlings tussen die verweerder en die
kontrakteur was nie. Die eiser het geweet dat die bouheer
nie vir hom nie, maar
vir die kontrakteur sou betaal. Onder die omstandighede meen ek dat die
waarskynlikhede daarop dui dat daar
wel met die lewering van die stene op die
perseel ‘n voorstelling was dat die kontrakteur by magte was om oor die
stene te
beskik.’
[5] The appellant’s counsel submitted that
this reasoning was wrong and relied on a passage in B & B Hardware
Distributors (Pty) Limited v Administrator, Cape 1989 (1) SA 957 (A),
subsequently followed by Kannemeyer JP in Saflec Security Systems (Pty)
Limited v Group Five Building (East Cape) (Pty) Limited 1990 (4) SA 626 (E).
In B & B, which was a case concerning representation by conduct,
Rabie ACJ said at 964I-965B:
‘In order to found an estoppel, a
representation must be precise and unambiguous. (See Hartogh v National
Bank 1907 TS 1092 at 1104, and the judgment of this Court in the case of
The Southern Life Association Limited v L C van Deventer Beyleveld
NO; delivered on 22 September 1988 [1989 (1) SA 496 (A)]). In the present
case, judging by what is said in the papers, I am not sure
that it can be said
that the appellant, by delivering the goods at the building site without
informing the first respondent of its
reservation of ownership in the goods,
clearly and unambiguously represented to the first respondent that Thomas
Construction was
the owner of the goods, or that it had the jus
disponendi in respect thereof. I do not, however, find it necessary to give
a final decision on this question...’
[6] In Saflec the
facts were similar to the facts in the present case and may be summarised as
follows. The respondent contended that the applicant
was estopped from
vindicating electronic metal detectors which it had sold to a third party
because the applicant knew that they
would be delivered to a construction site
for a prison, which was being built for a Government department, and that the
equipment
would therefore (in terms of a standard clause in Government
contracts) become the property of that Government department on being
brought
onto the site. The respondent further contended that by permitting or
authorising delivery of the detectors to the site,
without advising the
respondent of its reservation of ownership therein, the applicant had
represented to the respondent that the
purchaser of the equipment was the owner
of the goods and/or that the purchaser had the jus disponendi in respect
thereof. Kannemeyer JP quoted the passage from B & B set out above
and went on to say (at 634J-635A):
‘As in that case, so too in the
present case it seems to me that the alleged representation relied on by the
respondent is not
an unequivocal one.’
[7] The test postulated in
B & B that ‘in order to found an estoppel, a representation
must be precise and
unambiguous’[1] has been held to
be a correct reflection of our law in a case involving a representation in
words.[2] The present is not such a
case and the correctness of the decisions which lay down that test in such cases
was not debated before
us. It is therefore unnecessary and undesirable to
express a view in this regard. But the test in regard to a representation made
by conduct has been formulated differently. Our law is that a person may be
bound by a representation constituted by conduct if the
representor should
reasonably have expected that the representee might be misled by his
conduct[3] and if in
addition the
representee acted reasonably in construing the representation in the sense in
which the representee did so. It is true
that in Service Motor Supplies
(1956) (Pty) Limited v Hyper Investments (Pty) Limited 1961 (4) SA 842 (A)
at 848G-H Hoexter ACJ referred to ‘the only inference’ which the
representee ‘could possibly
have drawn from the conduct of’ the
representor. But that this dictum reflects the facts in the particular
case and is not to be taken as the requirement in all cases, appears from the
subsequent decision
of this court in Poort Sugar Planters (Pty) Limited v
Minister of Lands[4] at 365A-C
where Ogilvie Thompson JA, dealing with conduct on which it was sought to found
an estoppel, said:
‘Moreover, in my judgment, a representation, to
found an estoppel, must (to borrow a phrase from Halsbury, 3rd ed. vol.
15 para. 426) be such as will reasonably be understood by the person to whom it
is made in the sense contended for
... [I]t does not appear to me that
respondent’s conduct ... could reasonably have been understood by
appellant in the sense
now contended for by it.’
Furthermore, Trollip J
said in Electrolux (Pty) Limited v Khota 1961 (4) SA 244 (W) at
246A-C:
‘Consequently, I think that generally and logically the first
enquiry should be into what was the specific conduct of the owner
that the
respondent relies upon for the estoppel. If that conduct is not such as would in
the eyes of a reasonable person, in the
same position as the respondent,
constitute a representation that the swindler was the owner of, or entitled to
dispose of, the articles,
then cadit quaestio ─ no estoppel could
then arise. But if such conduct does beget that representation, then the next
enquiry would logically be
whether the respondent relied upon, or was misled by,
that representation in buying the articles.’
[8] Both the passage
in Poort Sugar Planters and in Electrolux just quoted were
referred to by Rabie JA as authorities in support of the following finding in
his judgment in Van Rooyen v Minister van Openbare Werke en
Gemeenskapsbou 1978 (2) SA 835 (A) at 849D-F:
‘Appellant se
getuienis hou nie steek nie. Vanweë sy bekendheid met die inhoud van die
ooreenkoms, het hy geweet wat die
bevoegdhede van die ingenieur was en het hy
geweet dat slegs die Sekretaris van die Departement, of sy gedelegeerde, onder
klousule
18 kon optree. Hieruit volg dat daar nie optrede aan die kant van die
Department was wat appellant redelikerwys onder die indruk
kon gebring het dat
die streekverteenwoordiger bevoegd was om die ooreenkoms te repudieer
nie.’
And in the first edition of his book The Law of Estoppel in
South Africa published in 1992, Mr Justice Rabie himself
said[5] that the court in B &
B ‘referred to Hartogh v National Bank and to Southern Life
Association Ltd v Beyleveld NO and failed to note that in those cases the
rule that the presentation must be precise and unambiguous was mentioned in
connection
with representations made by words’. The same comment by the
same learned author is to be found in the revised edition of LAWSA,
published in 1996[6].
[9] In
view of the body of authority to which I have referred, including the judgment
of Rabie JA in Van Rooyen and his subsequent remarks expressed
extra-curially, I am driven to the respectful conclusion that the statement in
B & B incorrectly formulates the test for a representation by
conduct. The same criticism may be levelled at the decision in Saflec
where the test postulated was that the representation had to be
‘unequivocal’. Nevertheless if a representation by conduct
is
plainly ambiguous, the representee would not be acting reasonably if he chose to
rely on one of the possible meanings without
making further enquiries to clarify
the position.
[10] The appellant’s counsel placed much store by an
alleged concession wrung out of the respondent during cross-examination,
which
he submitted was to the effect that any logical person, including Uys of the
appellant, could have accepted that the respondent
knew of a ‘general
practice’ whereby ownership is reserved by the seller in building
materials sold on credit to a builder.
The respondent’s evidence on this
point is not clear from the record inasmuch as a crucial answer given by him was
not transcribed
in full. There was no evidence on record that the respondent
knew, or that Uys could reasonably have accepted that he knew, that where
building materials are sold on credit, the seller frequently
or even usually,
much less invariably, reserves ownership in them until paid. At best for the
appellant the concession, if made,
can only amount to this: That Uys of the
appellant was entitled to assume that the respondent knew that sometimes
building suppliers
reserve ownership in goods sold on credit. But that would not
suffice to defeat the plea of estoppel. An owner’s rei vindicatio
can be defeated not only when the representation made by the owner is that a
third party is the owner, but also where the representation
is that the third
person is entitled to transfer ownership to the
representee.[7] In this latter regard
there are the following important facts, all known to Uys. The paving stones
were going to form part of the
works being constructed by the builder for the
respondent. They were purchased for that specific purpose. Without them, the
building
works
could not be completed. The colour of the majority was chosen
to match the building. A number had to be cut and fitted. Although,
on the
evidence of Uys, they could without difficulty be picked up, it is clear that
some effort would have been required to perform
this task bearing in mind the
area (some 570 m²) and the fact that they had been embedded in a sand base.
All of these facts
suggest that the paving stones, once laid, were going to
remain permanently in place and the admission by the respondent that they
remained movables does not detract from this ─ it merely has the effect
that the respondent is precluded from arguing that
he became the owner of the
paving stones by accessio.
[11] In the circumstances the conduct
of the appellant could, despite the alleged concession, reasonably have been
expected to mislead
the respondent into believing that the builder (even if not
the owner) had the right to transfer ownership in the paving stones;
and
furthermore, the respondent acted reasonably in forming the belief which he did:
cf the reasoning in Konstanz Properties (Pty) Limited v Wm Spilhaus & Kie
(WP) Beperk (above, n 7) at 286E-288D, and the autorities there quoted, none
of which it is necessary to repeat.
[12] The appellant also put in issue
whether it was negligent. It clearly was. The alienation of the paving stones in
question by
the builder to the respondent took place with the approval and in
accordance with the expectations of the appellant ─ that
was the very
purpose for which they were supplied. The builder was entitled to dispose of
them in the ordinary course of the building
operations undertaken for the
respondent, even before he made payment to the appellant ─ indeed, they
were required urgently,
and it could therefore have been expected that they
would be laid quickly. The appellant must have been aware of the possibility
that the builder might not pay the amount owing to it ─ it was for that
very reason that the appellant reserved ownership in
the paving stones. But the
reservation of ownership created the further foreseeable possibility which the
appellant did not guard
against, namely, that the respondent would pay for the
paving stones once they had been laid, in the belief that he would thereby
become the owner. The reasoning in Konstanz Properties at 288D-I which I
have largely paraphrased in this paragraph is directly applicable and it is
decisively against the appellant on
this point.
[13] The other
requirements of estoppel were not put in issue by the appellant, and rightly so.
They accordingly do not require consideration.
[14] The appeal is
dismissed, with costs.
______________
T D CLOETE
JUDGE OF
APPEAL
Concur: Scott JA
Zulman JA
Farlam JA
Conradie JA
[1] This is the position in
England, at least in regard to a representation in words: Woodhouse A.C.
Israel Cocoa Ltd SA and Another v Nigerian Produce Marketing Co Ltd [1972]
AC 741 (HL, E) which establishes that the words have to bear only one reasonable
meaning (Lord Hailsham at
756D-F).
[2] Hartogh v National
Bank 1907 TS 1092 at 1104; Southern Life Association Ltd v Beyleveld
1989 (1) SA 496 (A) 503I-504C, but such an approach has been criticised by Rabie
LAWSA reissue vol 9 para 456 and Rabie and Sonnekus The Law of
Estoppel in South Africa (2 ed) p 75 para 5.3.3.3. The counter-argument is
put forcefully by Lord Denning MR in the Woodhouse case referred to in n
1 above in the Court of Appeal [1971] 2 QB 23 (CA)
59H-60H.
[3] Strachan v
Blackbeard and Son 1910 AD 282 at 288-9; Monzali v Smith 1929 AD 382
at 386; Poort Sugar Planters (Pty) Ltd v Minister of Lands 1963 (3) SA
352 (A) at 364F-G; Union National South British Insurance Co Ltd v Padayachee
1985 (1) SA 551 (A) at
562I-562B.
[4] Above n
3
[5] Page
37
[6] Vol 9 para
456
[7] Konstanz Properties
(Pty) Ltd v Wm Spilhaus en Kie (WP) Bpk 1996 (3) SA 273 (A) 284I-J, the
cases quoted at 286H-288E and the conclusion reached at 288C.
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