Northern Metropolitan Local Council v Company Unique Finance (Pty) Ltd and Others

• Jurisdiction: South Africa
• Judge: Mpati P, Cloete JA, Snyders JA, Bosielo JA and Ndita AJA
• Judgment Date: 21 May 2012
• Citation: 2012 (5) SA 323 (SCA)
• Docket Number: 36/11 [2012] ZASCA 66
• Hearing Date: 21 February 2012
• Counsel: AE Franklin SC (with DL Wood) for the appellant. GD Harpur SC (with A Coutsoudis) for the first and second respondents. No appearance for the third respondent.
• Court: Supreme Court of Appeal

Mpati P (Cloete JA, Snyders JA, Bosielo JA and Ndita AJA A concurring):

[1] The third respondent, Mr Johannes du Plessis (Du Plessis), was at all times relevant to the issues in this matter employed by the appellant as a superintendent in its security services department. On 30 October 1998 B he signed an agreement, purportedly on behalf of the appellant, in terms of which the appellant would rent from the first respondent — which formerly traded as Compufin Finance — a Sharp photocopying machine at a monthly rental of R12 009,90 over a period of 60 months. [1] (For convenience I shall refer to the first respondent as 'Compufin'.) C Two further rental agreements were signed by Du Plessis, purportedly on behalf of the appellant, in terms of which the latter would rent, from Compufin, radio phones and radio stations, respectively, at a rental of R77 520 per month in respect of each agreement over a period of 60 months. [2] The equipment was delivered to the appellant's security services section, but on 19 March 1999, and in circumstances which D shall become apparent later in this judgment, the appellant's strategic executive: corporate services, Mr Rudolph Bosman (Bosman), wrote a letter to Compufin advising that the appellant 'was unaware of [the three agreements]'; [3] that it had at no stage authorised the relevant transactions; and that they were accordingly null and void. Bosman also E demanded payment of the total amount of R232 560, which appeared to him to represent three payments of R77 520 each made by the appellant 'via bank debit orders on 15 February 1999, 22 February 1999 and 15 March 1999 respectively . . .'.

[2] Compufin and the second respondent, First National Bank Ltd, to F which Compufin had ceded all its rights, title and interest in the third agreement, subsequently issued summons against the appellant and Du Plessis, as first and second defendants respectively, claiming payment from the appellant of the sums of R971 703,96 and R6 272 032,80 to Compufin in respect of the first and second agreements, [4] and G R6 272 032,80 to the second respondent in respect of the third agreement as damages for breach of contract. In the alternative and in the event that Du Plessis did not have the requisite authority to sign the agreements on behalf of the appellant, Compufin claimed from the appellant and Du Plessis, jointly and severally, payment of the sum of R6 861 816,29 as delictual damages suffered by it as a result of H Du Plessis falsely representing that he had such authority. Du Plessis' false representation, so it was alleged in the particulars of claim, was intended to, and did in fact induce Compufin 'to pay the price of the

Mpati P (Cloete JA, Snyders JA, Bosielo JA and Ndita AJA concurring)

A equipment to the supplier thereof so as to supply the equipment to the [appellant's] employees and officials'.

[3] In its plea the appellant denied liability and specifically denied that Du Plessis was authorised by it to sign the rental agreements. To this the B respondents replicated and pleaded, in the alternative, that the appellant had represented that Du Plessis had authority and that it was therefore estopped from denying his authority. On the other hand, Du Plessis denied in his plea that he did not have the necessary authority to conclude the first and second agreements and pleaded that he did have the authority to do so. It appears from the judgment of the court a quo [*] C (Blieden J), however, that after all the evidence was led and after each of the parties had closed their cases, it was conceded on behalf of the respondents that Du Plessis lacked actual authority to conclude the rental agreements. At the stage of argument before Blieden J, therefore, and indeed in this court, the only issue to be decided was whether the appellant had created the impression that Du Plessis was authorised to D conclude the agreements on its behalf, thus clothing him with ostensible authority.

[4] Having found that Compufin's witnesses had 'made it clear that as far as they were concerned they were not relying on any representation E made by Du Plessis, but on a proper and acceptable resolution confirming Du Plessis's authority to sign the three contracts on behalf of the [appellant]', Blieden J concluded that Compufin 'cannot succeed in a [delictual] claim for damages against Du Plessis . . .'. He accordingly dismissed Compufin's claim against Du Plessis with costs, but granted the contractual claims against the appellant (albeit in slightly lesser F amounts) with interest and costs on the scale as between attorney and client (as provided for in the contracts), including costs of two counsel. It is the order made in favour of the respondents against the appellant that is the subject of this appeal, which is before us with leave of the court below.

G [5] It would be convenient, at this stage, to set out some facts, which appear to be common cause or undisputed. Corporate services, of which Bosman was the strategic executive, is one of seven clusters within the appellant. Within corporate services there are seven subclusters, one of which is security services. Each of the subclusters is headed by an executive officer. Mr Billy Mosiane (Mosiane) was the security sub-cluster's H executive officer. At a level below him were the positions of two managers, one for operations and the other for strategic services. Yet a level below the managers was the position of senior superintendent, which was occupied by one Mr Wimpie van Wyk (Van Wyk). Du Plessis's position of superintendent was a level below Van Wyk's and I the latter was his immediate superior. A superintendent was one level above the lowest rank in the security subcluster, namely that of a security

Mpati P (Cloete JA, Snyders JA, Bosielo JA and Ndita AJA concurring)

guard and law enforcement officer. Mosiane, Van Wyk and Du Plessis A were, according to Bosman, housed in a building known as the Metro Building, separate and diagonally across the street from the appellant's main offices.

[6] Du Plessis testified that during 1998 (he could not remember the B date) he met two ladies, Ms Ilse Krause (Krause) and Ms Karen Willemse (Willemse), who sought from him directions to the office of the strategic executive: finance. After he had directed them and since they had introduced themselves to him as 'salespersons of office equipment' he requested from them a business card. He was interested in procuring a photocopy machine (photocopier) for the security department because C they had had to make copies of documents containing private and confidential information at other departments. This, according to him, posed a security risk. The following day he telephoned Krause and requested an interview with her. She obliged and after the interview she introduced him to Mr Jeff Rahme (Rahme) of Jeff Rahme Consultancy. D It is not in dispute that Rahme was an approved broker who discounted various agreements with Compufin and that Krause and Willemse were the owners of a company known as Africon. (I shall henceforth refer to them collectively as the Africon owners.) There was an understanding between Compufin, Rahme and the Africon owners that when Africon had a sale agreement for which they required financing, the sale would be E processed through Jeff Rahme Consultancy for discounting with Compufin. This was because Africon was not an approved broker with Compufin, although the Africon owners were, according to Mr Deon Blignaut (Blignaut), the advances manager at Compufin at the relevant time, well known to Mr Anthony McLintock (McLintock) who was Compufin's managing director. F

[7] Du Plessis testified further that after he had been shown a brochure by Rahme, of Sharp photocopiers with all the necessary accessories, he introduced the Africon owners to his superiors, Van Wyk and Mosiane. He said that the Africon owners 'requested that we enter into an G agreement with African Bank that would enable us to get the mentioned photocopier'. Van Wyk instructed him, so he testified, to purchase the photocopier after he had told the Africon owners that he (Van Wyk) and Mosiane would not be available as they were to attend a security conference for a certain period. [5] Van Wyk 'signed a resolution which gave [him] signing powers with [the Africon owners]'. A few days after H he had signed the agreement for the rental, the photocopier was delivered by Rahme in the presence of both Van Wyk and Mosiane. The photocopier was installed in his office so as to avoid it being abused. This was on the instructions of Van Wyk.

[8] During the installation of the photocopier and having seen a radio I supplier's business card on Du Plessis' desk, Rahme asked him if he was looking for a radio system. His response was that the security department

Mpati P (Cloete JA, Snyders JA, Bosielo JA and Ndita AJA concurring)

A wanted to upgrade their current security system. Rahme responded that he was selling a brand-new system which comprised radio communication, cellular-phone accessibility and a tracking unit. By then Du Plessis knew, having been told this by Mosiane, that the life of one of the appellant's councillors had been threatened and that the councillor B concerned had requested protection from the security department. He saw this as an opportunity and later contacted Rahme and requested him 'to get the necessary documentation and authorisation in place in order for him to supply me with the radio phones'. After he had signed the necessary documents the radio phones were delivered to the appellant's C premises. He ordered one Mr Frikkie Strauss, who worked in the stores, to issue the radios 'to all the security personnel'. A while later Mosiane telephoned him and summoned him to the office of one of the councillors, Councillor Nathan Jacobs (Councillor Jacobs), with a radio...