B & B Hardware Distributors (Pty) Ltd v Administrator, Cape, and Another

• Jurisdiction: South Africa
• Judge: Rabie ACJ, Hoexter JA, van Heerden JA, Grosskopf JA, Eksteen JA
• Judgment Date: 01 December 1988
• Citation: 1989 (1) SA 957 (A)
• Hearing Date: 03 November 1988
• Court: Appellate Division

Rabie ACJ:

On the return day of a rule nisi which called upon the respondents to show cause why the appellant should not be declared to be G the owner of certain goods, and why the respondents should not be ordered to hand over the said goods to the appellant, the Eastern Cape Division (per Jennett J) held that the appellant was the owner of the goods, but that it was estopped from asserting its ownership therein. The rule nisi was accordingly discharged with costs. The appeal is against that order. The facts of the case, insofar as relevant to H the appeal, are set out hereunder.

The appellant trades as a supplier of ironmongery. Its principal place of business is in Selby, Johannesburg. In March 1984 the Provincial Administration of the Cape of Good Hope (the first respondent) and a company called Thomas Construction (Pty) Ltd entered into a written agreement in terms of which the company (hereinafter referred to I as 'Thomas Construction') was to erect a hospital at King William's Town. According to Mr B H Escreet, who deposed to the appellant's founding affidavit and who is a director of the appellant, he was requested by Thomas Construction early in March 1985 to quote for the supply of ironmongery to be used in the construction of the hospital. On J 9 March 1985 - thus Escreet - he telephoned Mr David Gradwell, who was

Rabie ACJ

A employed by Thomas Construction as the 'construction buyer' in respect of the aforesaid hospital contract. They discussed the quotation required by Thomas Construction, and Escreet undertook to submit prices to Thomas Construction in due course. On 25 March 1988 Escreet again spoke to Gradwell on the telephone. Gradwell told him that Thomas Construction would in all likelihood place an order with the B appellant. On 11 April 1985 the appellant sent a written quotation to Thomas Construction. On 19 May 1985 Gradwell telephoned Escreet and advised him that Thomas Construction would be placing an order with the appellant. On that occasion (ie 19 May 1985), Escreet says, it was C agreed between himself and Gradwell that all goods to be supplied by the appellant would be supplied subject to the appellant's 'standard terms and conditions', one of which terms was that ownership in any goods supplied would remain vested in the appellant until the full purchase price of such goods had been paid to the appellant. On 20 May 1985 Thomas Construction sent a number of 'buying orders' to the appellant, D and during the period September to October 1985 goods to the value of R84 573,35 were sent to Thomas Construction and delivered at the building site in King William's Town.

Escreet's aforesaid statements relating to his dealings with Gradwell and the agreement concluded between them on 19 May 1985 are confirmed by Gradwell in an affidavit deposed to by him.

E Thomas Construction was liquidated provisionally on 12 November 1985, and finally on 18 December 1985. At that stage it had not made any payment for the goods it had ordered from the appellant. The liquidators of Thomas Construction also made no payment to the appellant in respect of the purchase price of the goods. On 31 January 1986 the F appellant caused a letter to be sent to the liquidators in which it cancelled its agreement with Thomas Construction and demanded the return of the goods it had sold and delivered to Thomas Construction.

In February 1986 the first respondent entered into an agreement with the second respondent (R McCarthy & Co (Pty) Ltd) in terms of which the second respondent was to complete the work left unfinished by G Thomas Construction. Thereafter the first respondent also entered into an agreement with the liquidators of Thomas Construction in terms of which Thomas Construction sold its plant and equipment on the building site to the second respondent. The liquidators' attitude to the appellant's claim that it was entitled to the return of the goods it had H sold to Thomas Construction was, according to Escreet, that they had no interest in the goods and that the first respondent had, by virtue of the provisions of clause 12 of its agreement with Thomas Construction, become the owner of the goods. (More will be said about clause 12 of the said agreement later in the judgment.) The State Attorney at Port Elizabeth, acting on behalf of the first respondent, stated in a I letter written - so it would seem - on 22 May 1986, that the first respondent had 'paid for the said goods in terms of a payment certificate and considered (itself) to be the owner of the said goods', and that it was not prepared to give an undertaking that the goods would not be used in the construction of the hospital.

J The rule nisi, referred to in the first paragraph of this judgment, was issued on 5 June 1986.

Rabie ACJ

A The first respondent's answering affidavit was deposed to by its deputy director of works, Mr R F Delport. In this affidavit he resisted the appellant's claim for the return of the aforesaid goods on several grounds. The first of these grounds was that Gradwell had no authority from Thomas Construction to enter into an agreement whereby the ownership in the goods would remain vested in the appellant after B the goods had been delivered to Thomas Construction. The other grounds are set out in a paragraph - para 6(d) of his affidavit - which I propose to quote in full. It reads as follows (I have inserted the letters (A) and (B) therein to facilitate reference to the main and alternative parts of the paragraph):

'(A)

I state further that the applicant, through its employees, C including the said Escreet, who had and who have knowledge of the building industry and the usual provisions to be found in building contracts, was aware of the fact that once goods are delivered to a building site the value of such goods will be included in payment certificates issued by the architect and that this would result in the employer making payment, in accordance with such payment certificate, D of the value of such goods to the contractor. This is what invariably occurs in contracts of this nature and I have no doubt that the applicant was aware of this. Upon payment of the value of such goods by the employer to the contractor the employer becomes the owner of such goods. This is also what occurred in the present instance. The value of the ironmongery in question was included in payment certificates issued by the architect and an amount of R84 000 was paid E by first respondent to Thomas Construction (Pty) Ltd in respect of these goods. By making such payment first...