Connock's (SA) Motor Co Ltd v Sentraal Westelike Ko-operatiewe Maatskappy Bpk

• Judge: Trollip J
• Judgment Date: 24 January 1964
• Citation: 1964 (2) SA 47 (T)
• Court: Transvaal Provincial Division

Trollip, J.:

This is an action for payment of R542.75 which plaintiff alleges is the balance of an open account for services rendered and goods supplied by it to the defendant.

The plaintiff is a motor firm conducting a branch business at A Klerksdorp. The defendant is a co-operative society conducting business, according to its letterheads, in the O.F.S. and Western Transvaal with its head office in Klerksdorp. The extent of its business activities appears to be appreciable and it employs a considerable number of persons on its staff in Klerksdorp.

B From the 18th October, 1958, which must have been shortly after plaintiff opened its branch in Klerksdorp, until the 6th February, 1961, the plaintiff rendered services in respect of some of defendant's motor vehicles and sold and delivered motor spare parts on orders placed by defendant's employees. The details of the debits and credits are set out in annexures A and B to the declaration.

C The dispute turns on certain transactions in which the plaintiff sold and delivered goods to one de Jager, an employee of the defendant, who purported to act on defendant's behalf in placing orders for and receiving goods.

D The evidence proves that de Jager was merely a clerk employed by defendant in its general section, one of whose duties it was to check the invoices and accounts rendered to defendant relating to that section; that he had himself no authority to sign orders or purchase any goods on defendant's behalf; that he fraudulently misrepresented to the plaintiff that the defendant had authorised the particular purchasing E orders and that he was authorised by defendant to place them with plaintiff and to receive delivery of those goods; that plaintiff in good faith supplied the goods to him and charged defendant therewith: that defendant did not in fact receive the goods; and that neither plaintiff nor defendant was at any time aware of de Jager's fraud.

F One is happy to learn that de Jager was duly convicted and sentenced to imprisonment for his crime.

The problem in the case consequently resolves itself into which of two innocent persons must suffer the loss occasioned by the fraud. Mr. Heyns, for the plaintiff, urged strenuously that the equities were in favour of the plaintiff because de Jager was an employee of the defendant and that the defendant could have ascertained the true G position if it had exercised due diligence. Equity, however, in this context is a slippery concept as is evident from the rejection by the Courts of the dictum of ASHURST, J., in Lickbarrow v Mason, 100 E.R. 35 at p. 39, that it was

'a broad general principle that, wherever one of two innocent parties H must suffer by the acts of a third, he who has enabled such person to occasion the loss must sustain it'

(see e.g. Grosvenor Motors (Potchefstroom) v Douglas, 1956 (3) SA 420 (AD) at p. 425 G - H; Trust Bank of Africa Ltd v Eksteen, 1964 (1) SA 74 (N) at p. 89 H). Moreover, I do not think that the defendant was proved to have been negligent in any respect. It has not been proved that it was unreasonable in trusting de Jager or that with due diligence it could earlier have ascertained his frauds. The only basis, therefore, upon which the plaintiff can and did base its case is estoppel;

Trollip J

that is, that defendant was estopped by its conduct from denying de Jager's authority to bind it by his acts or from denying its liability for the purchases in question.

The English doctrine of estoppel by representation migrated to this A country on the authority of a passport that it approximated the exceptio doli mali of Roman Law. However doubtful the validity of that passport might originally have been (cf. de Wet Estoppel by Representation, Chap. II and secs. 1 and 2 of Chap. V) the doctrine has now become naturalised and domiciled here as part of our law as Prof. de B Wet's thesis (p. 15) and many authoritative decisions of our Courts show. The general statement of the doctrine as set out in Spencer Bower on Estoppel by Representation (p. 10) is usually accepted as being correct for practical purposes (see e.g. Hopwood v Brown, (1955) 1 All E.R. 550 at p. 559; Union Government v Vianini Ferro-Concrete Pipes (Pty.) Ltd., 1941 AD 43 at p. 49). It reads -

'where one person C ('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 D averment substantially at variance with his former representation, if the representee at the proper time, and in the proper manner, objects thereto'.

In the application of those requisites to particular situations, it is only natural that in practice our Courts should and do look to English decisions for guidance (see all the authorities collected in a recent E judgment by CORBETT, A.J., as he then was, in Hauptfleisch v Caledon Divisional Council, 1963 (4) SA 53 (C) at p. 56). But, as often happens with foreign principles and doctrines, once they have permanently settled here, they tend to develop along lines that are peculiar to South Africa in conformity with the fundamental concepts of our own law. That is particularly not surprising in regard to estoppel because even in its country of origin, since before and after its first F formulation in modern form in 1837 in Pickard v Sears, 112 E.R. 179, estoppel by representation has had an interesting history of constant development in England. In Lord COKE'S time estoppel could only be founded on particular acts and declarations of the most formal kind (see Spencer Bower paras. 5 - 9); but by 1837 Lord DENMAN, C.J., could state G with confidence in Pickard v Sears that any words or any conduct could give rise to it provided the representation thereby conveyed was made 'wilfully', i.e. fraudulently; and in 1848 the extension of the rule was confirmed in Freeman v Cooke, 154 E.R. 652, to include not only a representation by words or conduct made intentionally, even if not fraudulently, but also a representation by words or conduct made H unintentionally or resulting from negligence or omission which a reasonable man would have assumed was intended to be and would have acted upon. That objectivism in estoppel by representation therefore dates from Freeman v Cooke, and is still in the process of being developed and defined by English and our Courts.

This progress towards achieving complete objectivity has been faster and appears to be more advanced in estoppel founded on representation

Trollip J

by express and unequivocal statements of fact than that based on representation by mere conduct (which term I use to include silence or inaction) and this difference between the two classes should consequently be borne in mind in considering the decided cases.

A The reasonable man postulated by the objective test in English law is one in the position of the representee and not the representor; in other words the law generally looks at the matter from the former's and not the latter's viewpoint. That appears clearly from the rule itself as B adumbrated in the various leading English cases, e.g. Freeman v Cooke, supra at p. 656; Cornish v Abington, (1859) 157 E.R. 956 at p. 959; Carr v London & North Western Railway Co., (1875) L.R. 10 C.P. 307 at p. 317; Sidney Bolsom Investment Trust Ltd v E. Karinos & Co. (London) Ltd., (1956) 1 All E.R. 536 at p. 539 H. See too Halsbury, 3rd ed. vol. 15 para. 338 p. 19 and Spencer Bower paras. 144 and 229. This C was trenchantly expounded by Lord SHAND in the Privy Council in 1892 in Sarat Chunder Dey v Gopal Chunder Lala, 8 T.L.R. 732 at p. 733:

'The law of this country gave no countenance to the doctrine that in order to create estoppel, the person whose acts or declarations induced another to act in a particular way must have been under no mistake himself or must have acted with an intention to mislead or deceive. What D the law . . . mainly regarded was the position of the person who was induced to act. . . . If the person who made the statement did so without full knowledge or under error, sibi imputet. It might in the result be unfortunate for him, but it would be unjust, even though he acted under error, to throw the consequences on the person who believed his statement and acted on it; as it was intended he should do.'

That is the general objective approach followed in English law. It is obvious, however, that to have regard only to the position of the E representee in applying the objective test could in certain circumstances bear unjustly or unduly harshly on a representor, especially if he was innocent or blameless, and because the foundation of estoppel is still equity, our Courts have evolved a different approach in estoppel based on unintentional conduct in applying an objective test.

F In Strachan v Blackbeard & Son, 1910 AD 282, Lord DE VILLIERS, C.J., said at p. 289 that for such conduct (in that case a course of dealing) to found an estoppel it had to be:

'of such a nature that it could reasonably have been expected to mislead'.

That was an obiter dictum because all three Judges decided the appeal on G the ground that the plaintiffs were not in fact misled by any conduct of the defendant, and neither of the other two Judges (INNES and SOLOMON, JJ.A.) alluded to any such principle. It may be that DE VILLIERS, C.J., in making that statement, meant nothing more than the objective test as laid down in English law; that is, that the conduct had to be of such a nature as would have...