Nieuwoudt and Another NNO v Vrystaat Mielies (Edms) Bpk

• Jurisdiction: South Africa
• Judge: Harms JA, Farlam JA, Brand JA, Cloete JA and Van Heerden AJA
• Judgment Date: 28 November 2003
• Citation: 2004 (3) SA 486 (SCA)
• Docket Number: 325/02
• Hearing Date: 14 November 2003
• Counsel: C Ploos van Amstel SC for the appellants. J J Pretorius for the respondent.
• Court: Supreme Court of Appeal

Farlam JA:

[1] This is an appeal against a judgment of Van Coppenhagen J, sitting in the Orange Free State Provincial Division, in terms of which it was J

Farlam JA

found that an agreement concluded between a close corporation and the appellants, in their capacities as trustees of a family A business trust, was valid and enforceable and that the close corporation's rights had been ceded to the respondent. The judgment of the Court a quo has been reported: see Vrystaat Mielies (Edms) Bpk v Nieuwoudt en 'n Ander NNO 2003 (2) SA 262 (O). B

[2] The agreement in question, which was concluded on 9 May 2001, was for the sale of 900 tons of yellow maize at R785 per ton, delivery to be effected during the period from 1 June 2002 to 31 July 2002. The deed of sale described the seller as 'JJ Boerdery Trust (James Nieuwoudt)' (James Nieuwoudt being the name by which the first appellant is known) and was signed by the first C appellant above the word 'Verkoper'. The agreement was thereafter ceded, on 25 January 2002, to the respondent.

[3] As appears from the dates of the contract and the date on which the maize was to be delivered, the contract was an advance contract, what was described in the papers as a 'vooruit-kontrak', D concluded before the maize to be sold was planted and produced. By March 2002, when the respondent launched the application which terminated in the order now on appeal, the price of maize, which had earlier risen as high as R1 640 per ton, was R1 239 per ton, which may explain the stance taken by the appellants in this matter. E

[4] On 20 February 2002, the respondent sent to the appellants by facsimile transmission a letter to which was attached a confirmation of the contract in which the appellants were requested to confirm in writing that they would respect the contract. In a letter F sent to the respondent by the appellant's attorneys, it was stated that the trust did not intend implementing any deliveries because of the nullity of the alleged contract. No reason was given for the assertion that the contract was a nullity. G

[5] This reason was forthcoming only after the respondent had launched the present proceedings. In his opposing affidavit, the first appellant annexed a copy of the trust deed of the family trust, as well as a copy of the letter of authority issued by the Master of the High Court at Kimberley authorising the appellants to act as trustees of the trust. He pointed out that, in terms of the trust deed, H where there were only two trustees (as is the case), all decisions of trustees had to be unanimous. This provision of the trust deed notwithstanding, he did not have the second appellant's authorisation or approval to act on her behalf in signing the contract in question. He also said that, insofar as the contract stated that it contained the I details of an agreement which had been telephonically or orally concluded between the close corporation and the trust, the second appellant had also not participated in the conclusion of any telephonic or oral agreement with the close corporation. He concluded this paragraph of his affidavit by stating that he had been J

Farlam JA

advised that, in view of the facts which I have summarised, no binding A agreement came into existence between the close corporation and the trust.

[6] Although there was nothing in the trust deed which prevented the trustees from delegating certain functions to one of their number or even to an outsider (compare Coetzee v Peet Smith Trust en Andere 2003 (5) SA 674 (T) at 680I - J), the first appellant did B not deal expressly in his affidavit with the question as to whether powers of management over the trust business had been delegated to him so as to enable the day to day business of the trust to be carried on. Nor did he state whether he told his co-trustee, the second appellant, of the contract he had signed as seller - although, as he C stated elsewhere in his affidavit, it was never the intention that he should contract in his personal capacity - nor, if he did tell her, whether she had, by words or conduct, expressed agreement with what he had done or denied his authority to conclude the agreement.

[7] The second appellant contented herself with filing an affidavit confirming those parts of the...