Baker v Probert

• Jurisdiction: South Africa
• Judge: Corbett JA, Kotzé JA, Viljoen JA, Hoexter JA and Botha JA
• Judgment Date: 07 May 1985
• Citation: 1985 (3) SA 429 (A)
• Hearing Date: 04 March 1985
• Court: Appellate Division

Botha JA:

This is an appeal against a judgment granted against C the appellant in favour of the respondent in the Durban and Coast Local Division for payment of the sum of R17 500, interest and costs. The judgment was the outcome of an action which had been instituted by the respondent against the appellant and which was heard by NIENABER J. His judgment has D been reported: see Probert v Baker 1983 (3) SA 229 (D); and it has elicited comment from a number of authors: see D J Joubert 1983 De Jure at 373; A J Kerr 1984 THR-HR at 460; J S McLennan 1984 SALJ at 39; G Lubbe 1984 SALJ at 616 and S W J van der Merwe and M F B Reinecke 1984 TSAR at 85. In what follows I shall refer to the reported judgment as "the report", and to E the appellant and the respondent respectively as "the defendant" and "the plaintiff".

The facts upon which the appeal falls to be decided are common cause and lie within a narrow compass. The defendant owned a so-called shareblock in a company, Rocca Marina Ltd. (The exact nature of a shareblock and the rights attaching thereto are matters of no consequence in this case and need not be F discussed.) The defendant wished to sell the shareblock and gave a mandate to find a purchaser for it to a firm of estate agents, York Estate & Investment Co (Pty) Ltd, to which I shall refer as "York Estate". York Estate found a purchaser in the person of the plaintiff. She signed an offer to purchase, bearing the date 18 November 1975. The offer was in the form of G a printed document, which was a standard form of offer used by York Estate, and in which, in the blank spaces provided for the purpose, an employee of York Estate had inserted, in manuscript, the details relating to this particular transaction, before it was presented by York Estate to the plaintiff for her signature. At the foot of the last page of H the document, immediately below the space provided for the offeror to sign as "purchaser" (where the plaintiff had affixed her signature), there was a printed form of acceptance of the offer by the offeree. That acceptance was duly signed by the defendant on 21 November 1975, above the printed word "sellers". So the document as a whole became the contract I between the parties, and I shall refer to it as such.

In the top left-hand corner of the first page of the contract the name "York Estate" appears in large capital letters. Immediately to the right thereof the printed words appear: "Acting as agents for:". In the document as printed there is then a blank space, underneath which the following words J appear: "jointly and severally (hereinafter referred to as 'the sellers')". In the blank space had been filled in: "Mr A B Baker";

Botha JA

those are the initials and the surname of the defendant. Thus, A ignoring the inapposite references to a plurality of sellers, the contract records that York Estate was acting as "agents" of the defendant, being the seller.

The shareblock which was the subject-matter of the sale is described in the heading of the contract. The body of the contract contains 18 clauses. For the purposes of this judgment it is necessary to refer only to clauses 1, 2, 3 and 5. In B clause 1 the "effective date" of the sale is fixed as 1 December 1975. Clause 2 provides that the total purchase price to be paid by the purchaser is the sum of R17 500. Clause 3 deals with the payment of the purchase price. In the printed form the clause was designed, in paras (a), (b) and (c), to make provision for the payment of a cash deposit, the payment C of a further instalment and a final payment of the balance of the purchase price on the effective date. However, in this case the whole of the purchase price was inserted in para (a), and expressed to be payable "on or before the effective date", with the result that the effect of clause 3 was to provide for the purchase price of R17 500 to be paid in cash on or before the D effective date. Clause 3 concludes with the following provision, which is of crucial importance in this appeal:

"All payments made in terms of this paragraph shall be made to the agents to be held by them in trust for payment to the sellers on the effective date provided that the sellers have complied with the provisions of para 5 hereof."

Clause 5 provides as follows:

"The sellers shall forthwith deliver to the agents, to be held E in trust by them

(a)

the share certificates in respect of the shareblocks, together with a duly completed share transfer form;

(b)

............"

(The further provisions of clause 5 are not relevant in this case.)

The plaintiff duly paid the purchase price of R17 500 to York Estate on 25 November 1975. The defendant did not deliver the F share certificates, either before the effective date or thereafter. He remained in default despite numerous demands for performance over a protracted period. Finally, on 3 March 1977, the plaintiff validly cancelled the contract on the ground of the defendant's breach of it. Shortly thereafter, on 11 March 1977, York Estate was placed in liquidation. The plaintiff proved a claim for repayment of R17 500 against York Estate, G but received no dividend.

In her particulars of claim the plaintiff originally put forward a main claim and two alternative claims. The latter claims were both founded upon alleged misrepresentations and they were expressly stated to be claims for damages. Both of H them were abandoned in the course of the proceedings in the Court a quo and nothing further need be said about them. The main claim, by contrast, did not purport to be a claim for damages. It was plainly a claim for repayment of the purchase price, ie for restitution of the plaintiff's performance, pursuant to the cancellation of the contract. It was solely on I that basis that the case was conducted and argued by counsel on both sides in the Court a quo. In his judgment NIENABER J discussed the arguments of counsel at some length (see the report at 231E - 233D), but declined to decide the case on the arguments presented to him (see the report at 233D). Instead, he found that the claim was capable of being construed as a claim for damages for breach of contract (at 233F - G and 236F J - G) and decided the case on that footing,

Botha JA

A holding that the plaintiff was entitled to payment of R17 500 by way of damages computed on the basis of her so-called negative interesse (at 233G - 236F).

I propose to consider the plaintiff's claim in accordance with the manner in which it had been formulated in her pleadings. She alleged, in brief, that, in terms of the contract between B the parties, the purchase price of R17 500 was to be paid by her to York Estate, "the duly appointed and authorised agents of the defendant"; that the defendant was to deliver to the said agents inter alia the share certificates in respect of the shareblock; that in terms of her obligations she paid to the agents the amount of R17 500; that the defendant, in breach C of the contract, failed to deliver the share certificates to the agents or to the plaintiff; that on 3 March 1977 she cancelled the contract and demanded repayment of the amount of R17 500 and interest thereon; and that in the premises the defendant was liable to pay to the plaintiff R17 500 together with interest thereon from 3 March 1977.

D In his plea, the defendant denied that York Estate was "the duly appointed and authorised agent of the defendant for the purpose of receiving or holding the purchase price". He alleged further that in terms of clause 3 of the contract York Estate was to hold "the said funds" in trust for payment to the defendant on the effective date, provided that the defendant E had complied with the provisions of clause 5 of the contract; that "accordingly" the sum of R17 500, when paid to York Estate, was a "species of depositum sequestrarium" and that York Estate "was in the position of a sequester or stakeholder"; that York Estate held the said amount "subject to an implied agreement" that, in the event of the contract being F cancelled, it would repay the amount to the plaintiff; and that "in fact and in law", once the plaintiff had legally cancelled the contract as she did, the only person upon whom she could properly make demand for repayment of the said sum was York Estate.

The crucial issue raised by the pleadings is whether or not York Estate was the agent of the defendant for receiving G payment of the purchase price from the plaintiff. In argument before this Court counsel for the defendant readily conceded that, if this issue were decided in favour of the plaintiff, the appeal had to be dismissed. The concession was unavoidable. It is not open to doubt that a purchaser, who has validly cancelled a contract of sale on the ground of the seller's breach of it, is entitled in principle to claim repayment of H the purchase price, paid to the seller in terms of the contract prior to its cancellation. The purchaser's right to claim repayment obviously exists also where payment of the purchase price was made, not to the seller in person, but to his duly authorised agent, since payment to an agent is equivalent in law to payment to the principal. In this I situation the purchaser's right to claim repayment from the seller is unaffected by the failure or inability of the agent to pay over the purchase price to the seller. Although statements can be found in cases and in textbooks suggesting that the seller's liability is based on enrichment, I agree with the view, and the reasons for it, expressed by De Vos Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg 2nd ed at J 141 - 143, that a claim for restitution of performance following upon cancellation of a contract for breach is not a condictio (cf

Botha JA

Landau v City Auction Mart 1940 AD 284 at 292 - 4 and Minister A van Landbou-Tegniese Dienste v Scholtz 1971 (3) SA 188 (A) at 198C - D)...