Frank R Thorold (Pty) Ltd v Estate Late Beit

• Jurisdiction: South Africa
• Judgment Date: 22 August 1996
• Citation: 1996 (4) SA 705 (A)

Frank R Thorold (Pty) Ltd v Estate Late Beit
1996 (4) SA 705 (A)

1996 (4) SA p705

Citation	1996 (4) SA 705 (A)
Case No	488/94
Court	Appellate Division
Judge	Corbett CJ, Smalberger JA, F H Grosskopf JA, Nienaber JA and Plewman AJA
Heard	May 14, 1996
Judgment	August 22, 1996
Counsel	M Tselentis SC (with him G Josman SC) for the appellant; N N Lazarus (with him A E Bham) for the respondent

Flynote : Sleutelwoorde A

B Auction and auctioneer — Auctioneer — Missed or overlooked bid — Conditions of business governing auction providing that 'any dispute will be settled at the auctioneer's absolute discretion' — Auctioneer overlooking bid higher than that at C which hammer dropped — Overlooked bidder protesting within seconds — After receiving confirmation that overlooked bidder had indeed bid, auctioneer re-opening bidding until lot knocked down to original bidder at substantially higher price — Original bidder refusing to pay higher price — Underlying auctioneer's written conditions of business recognition that situations producing D conflicting interests between bidders often arising at auction sales, and desirable that these be settled by auctioneer as quickly as possible — Word 'dispute' thus to be given expansive interpretation — Contention that original bidder not highest bidder implicit in objection that bid overlooked — Auctioneer thus to decide whether to reject overlooked bid or to re-open bidding — Effect of E decision either to confirm sale to original bidder or to nullify it — Until dispute settled, no question of valid sale to original bidder — 'Dispute' within meaning of word in conditions of business thus arising — Auctioneer given 'absolute discretion' to settle disputes — Entitled to re-open bidding to settle dispute. F

Headnote : Kopnota

At an auction sale of the Africana collection belonging to the respondent estate, an extremely rare book was knocked down to the appellant for R80 000. Within seconds thereafter one L protested that he had bid. The auctioneer had not known that L had entered the bidding and, after receiving confirmation from one of his 'bid spotters' that G L had indeed bid, the auctioneer re-opened the bidding at R85 000,

1996 (4) SA p706

A the figure at which L had bid. The book was eventually knocked down to the appellant for R300 000. When payment became due 30 days after the auction, however, the appellant tendered R80 000 on the grounds that there had been a valid sale to it at R80 000. The tender was rejected. The respondent sued the appellant in a Local Division for payment of R300 000. During the course of the trial the parties had agreed that, if the auctioneer had not been entitled to re-open the bidding, then there B had been no sale at R300 000, whereas if the auctioneer had been entitled to re-open the bidding, then the book had been sold at R300 000. The trial Court found in favour of the respondent.

The sale had been conducted in accordance with the auctioneer's written conditions of business. Condition 1 provided that '(t)he highest bidder will be the buyer at the "hammer price" and any dispute will be settled at the auctioneer's absolute discretion'. Condition 31 provided that the auctioneer had 'absolute discretion . . . in the case of dispute, to put up any lot for auction again'. C

In an appeal, the Court accepted that L had bid at the time and in the manner deposed to by him. The essential issue was thus whether or not the auctioneer had been entitled to re-open and continue the bidding. The auctioneer had stated in his evidence that when he had decided to accept that L had made a bona fide bid higher than the appellant's and to re-open the bidding, he had exercised the 'auctioneer's absolute discretion' to settle 'any dispute' conferred upon him by condition 1. It was the D appellant's contention that no such 'dispute' had arisen and that the auctioneer therefore had had no such discretion.

Held, that the word 'dispute' in condition 1, preceded as it was by the word 'any', had to be given an expansive, rather than restrictive, interpretation: underlying condition 1 was the recognition that at auction sales situations often arose where there were conflicting interests, inter alia as between bidders, and that it was desirable that those E be settled on the spot and as quickly as possible by the auctioneer. (At 733A-C/D.)

Held, further, that the burden which would otherwise be placed on the auctioneer, who had to make up his mind quickly, often in circumstances of confusion, if he were required to do more than recognise the existence of a genuine dispute, pointed to an expansive interpretation. (At 733D.)

Held, further, that implicit in L's objection that he had made a bid while the bidding had F still been open was the contention that the appellant had not been the highest bidder and that accordingly the lot should not have been knocked down to the appellant, while the appellant's attitude had been that, with the fall of the hammer, it had purchased the book for R80 000. The auctioneer, accordingly, had been called upon to decide whether to reject L's bid or to re-open the bidding, and the effect of his decision would have been either to confirm the sale to the appellant or to nullify it. (At 733E-H, paraphrased.)

G Held, further, that, in view of the evidence and the case law, which indicated that the missing of a vital bid was not an infrequent occurrence, it seemed to be improbable that condition 1, and similarly worded conditions, had not been intended to cater for that situation. (At 734A/B-B.)

Held, further, that the question raised by L's protest had been whether the appellant had been the highest bidder: that had been the dispute which the auctioneer had been required to settle as condition 1 identified the buyer as the 'highest bidder' and, until the H dispute had been settled, there could be no question of a valid sale to the appellant. (At 734C-D.)

Held, accordingly, that a 'dispute' within the meaning of that word in condition 1 had arisen and that the auctioneer had the power to settle the dispute. (At 734D.)

Held, further, that the only way in which the auctioneer could have given recognition to the overlooked bid and, at the same time, mete out equitable treatment to the appellant to whom the book had been knocked down was to have re-opened the bidding. The I auctioneer was accorded the widest possible powers by condition 1 and re-opening the bidding had no doubt been intended to be one of them. (At 734E-F.) The appeal was accordingly dismissed.

The decision in Beit v Frank Thorold (Pty) Ltd 1994 (4) SA 457 (W) confirmed.

Cases Considered

Annotations

Reported cases

The following decided cases were cited in the judgment of the Court:

AGC (Advances) Ltd v McWhirter 1977 NSW 9454

J Beit v Frank Thorold (Pty) Ltd 1994 (4) SA 457 (W)

1996 (4) SA p707

A Demerara Turf Club Ltd (in Liquidation) v Wight [1918] AC 605 (PC)

Estate Francis v Land Sales (Pty) Ltd and Others 1940 NPD 441

Green v Rose (1900) 21 NSWR 226

Hayne & Co v Kaffrarian Steam Mill Co Ltd 1914 AD 363

Horden House (Pty) Ltd v Arnold [1989] VR 402

Richards v Phillips and Others [1967] 3 All ER 877 (Ch)

Richards v Phillips [1969] 1 Ch D 39 (CA) ([1968] 2 All ER 859)

B Shandel v Jacobs and Another 1949 (1) SA 320 (N)

SWA Amalgameerde Afslaers (Edms) Bpk v Louw 1956 (1) SA 346 (A)

Ulbrick v Laidlaw [1924] VLR 247.

Case Information

Appeal from a decision in the Witwatersrand Local Division reported at 1994 (4) SA 457 (Blieden J). The facts appear from the judgment of Corbett CJ. C

M Tselentis SC (with him G Josman SC) for the appellant: This case arose from the events at the public auction of Sir Alfred Beit's Africana books, paintings, furniture and silver at the Claremont Town Hall on the evening of 27 May 1991. The auctioneer was D Mr Stephan Welz of Stephan Welz & Co. Among the participants at the auction was Mr R Fryde, the managing director of the appellant, a firm of antiquarian book dealers; Mr P Mills of Clarke's Bookshop, who are also book dealers; and Mr R Levitt, a private collector of substance. All three were experienced participants at auctions. Item 537 was a rare edition of Le Vaillants Voyage dans L'Interieur de L'Afrique, a three volume work which had been published in 1796. The auctioneer's E catalogue reflected an estimated price of R25 000 to R40 000 for this work. Bidding commenced at R25 000. At R38 000 Mr Fryde entered the bidding. From this point until the bidding reached R78 000 the bidding was between Mr Fryde and Mr Mills. Mr Fryde bid R80 000. There were no further bids at that price. Mr Welz called the bid at R80 000 some 11 times, over a period of approximately 16 seconds, and then F knocked the item down to the appellant at that price. About two seconds later Mr Levitt addressed the auctioneer with the words 'Sir, I bid': it was his claim that he had bid higher than Mr Fryde's R80 000 before the item had been knocked down to the latter. No such bid had come to the auctioneer's attention. Shortly after hearing Mr Levitt's challenge Mr Welz decided to re-open the bidding and did so at R85 000. Mr G Fryde protested. Mr Welz persisted at re-auctioning the item. Mr Levitt and Mr Fryde then bid against each other until the bids reached R300 000. At that stage Mr Levitt fell out and the lot was knocked down to the appellant again at R300 000. The essence of the dispute between the parties on the pleadings was the following. The H respondent contended that Mr Welz had the power to re-open the bidding. Accordingly the sale at R80 000 fell away and the purchase price which the appellant was obliged to pay was R300 000. The appellant contended that Mr Welz had no such power; that the contract which was concluded on the fall of the hammer at R80 I 000 stood; and...