Watson v Sachs and Another

• Jurisdiction: South Africa
• Citation: 1994 (3) SA 655 (A)

Watson v Sachs and Another
1994 (3) SA 655 (A)

1994 (3) SA p655

Citation	1994 (3) SA 655 (A)
Case No	647/92
Court	Appellate Division
Judge	van Heerden JA, E M Grosskopf JA, F H Grosskopf JA, Van den Heever JA and Harms JA
Heard	May 17, 1994
Judgment	May 27, 1994

Flynote : Sleutelwoorde B

Principal and agent — Subagent — Rights and duties of in relation to empowering agent and principal — Premise that, where empowering agent authorised to appoint subagent, there is full privity of contract between C principal and subagent a wrong premise — Subagent in concluding authorised agreement with a fourth party binds the principal — But, in order to determine relationship between principal and subagent, necessary to look at mandate by principal to agent and also mandate by agent to subagent — Whether such mandates create full privity of contract between subagent and D principal, with result, inter alia, that principal may claim moneys received from fourth party as a result of agreement concluded by subagent, acting on behalf of principal, and fourth party dependent on terms of mandate — Thus where mandate of agent to subagent provides that subagent must account to agent, principal cannot recover from subagent — Where E evidence indicating no more than that subagent instructed by agent to sell vehicle on behalf of agent and to forward proceeds to agent, mandate not creating duty upon subagent to account to principal.

Headnote : Kopnota

The premise (upon which a number of decided cases proceed) that, where an agent ('an empowered agent') is authorised to appoint a subagent and does F so, there is full privity of contract between the principal and the subagent is a wrong premise. It is necessary to draw a distinction between the relationship created by a subagent between the principal and a fourth party and the relationship between the principal and the subagent. When the subagent concludes an authorised agreement with the fourth party, he binds the principal. (At 653E-F/G.) In order to determine the relationship, if any, between a principal and a subagent, one must look at both the main mandate between the principal and the agent and the second G mandate between the agent and

1994 (3) SA p656

A the subagent. These may clothe the subagent with authority to bind the principal to a fourth party. Whether they also create full privity of contract between the subagent and the principal, with inter alia the result that the principal may claim moneys received by the subagent from the fourth party as a result of an agreement concluded between the latter and the subagent, acting on behalf of the principal, depends upon the terms of the mandates. So, for instance, the main mandate agreement may B provide, expressly or impliedly, that once a second mandate agreement has been concluded the principal will have no cause of action against the agent and will have to recover whatever is due from the subagent. But, even if the main agreement does so provide, the subagent appointed in terms of the second agreement may not be liable to account to the principal. That will depend upon the terms of the second agreement. Hence, if that agreement provides that the subagent must account to the agent, the principal cannot recover from the subagent. (At 654G-655A.)

C In the present case, an appeal from a decision in a Provincial Division, the Court a quo had held that the subagent (the appellant) was liable to pay to the principal (the first respondent) the proceeds of the sale of the principal's motor car, which the principal had instructed the agent (the second respondent) to sell and the latter in turn had instructed the subagent (the appellant) to sell. The Court on appeal pointed out that in the affidavits of the respondents (the principal and the agent) no more D had been said than that the agent had given a mandate to the subagent to sell the car on behalf of the principal. The subagent, in his opposing affidavit, had averred that he had been instructed to sell the car on behalf of the agent and had been requested to forward the proceeds to the agent. These averments, the Court held on appeal, did not create a duty upon the appellant to account to the principal for the proceeds, but provided, on the contrary, for an accounting by the subagent to the agent. (At 655E/F-G.) The subagent had further relied on a defence of set-off in respect of amounts allegedly owed by the agent to him. As there was some E doubt whether one of the amounts allegedly owed to him was owed by the agent, and not by a close corporation, the matter was referred to trial. (At 656C-D.)

The decision in the Cape Provincial Division in Sachs and Another v Watson 1993 (2) SA 88 reversed. F

Case Information

Appeal from a decision in the Cape Provincial Division (Conradie J), reported at 1993 (2) SA 88. The facts appear from the judgment of Van Heerden JA.

R G L Stelzner for the appellant.

Paul Tredoux for the respondents.

G Counsel for the appellant and the respondents referred to the following authorities:

Baker v Probert 1985 (3) SA 429 (A);

Belonje v African Electric Co (Pty) Ltd 1949 (1) SA 592 (E);

Central African Airways Corporation v D & M Williams (Pvt) Ltd 1963 R & N H 106;

Cobb v Becke (1845) QBD 930;

Colman v Dunbar 1933 AD 141 at 161-2;

De Bussche v Alt (1878) 8 ChD 286 (CA);

Denys v Elvy 1965 (2) SA 410 (SRA);

Dreyer v Sonop Bpk 1951 (2) SA 392 (O); I

Ex parte Edwards (1881) 8 QBD 262;

Faure, Neethling & Co v Beyers (1895) 11 SC 438 (5 CTR 434);

Frank v Ohlsson's Cape Breweries Ltd 1924 AD 289 at 294;

Gemeenskapsontwikkelingsraad v Williams and Others (2) 1977 (3) SA 955 (W) at 957;

Gertenbach and Bellew v Mosenthal and Others (1876) 6 Buch 88; J

1994 (3) SA p657

Great North Farms (Edms) Bpk v Ras 1972 (4) SA 7 (T); A

I L & B Marcow Caterers (Pty) Ltd v Greatermans SA Ltd and Another; Aroma Inn (Pty) Ltd v Hypermarkets (Pty) Ltd and Another 1981 (4) SA 108 (C) at 112H-114D;

Karaolias v Sulam t/a Jack's Garage 1975 (3) SA 873 (R);

Kennedy v Loynes (1909) 26 SC 271 at 279-80;

Lockwood v Abdy (1845) 14 Simon 437; B

Luna Meubel Vervaardigers (Edms) Bpk v Makin and Another (t/a Makin's Furniture Manufacturers) 1977 (4) SA 135 (W) at 137F;

Maitland Cattle Dealers (Pty) Ltd v Lyons 1943 WLD 1 at 19;

Mutual & Federal Insurance Co Ltd v Oudtshoorn Municipality 1985 (1) SA 419 (A) C at 433A-F;

Nel v South African Railways & Harbours 1924 AD 30 at 35-8;

New Zealand & Australian Land Co v Watson (1881) 7 QBD 374;

Oblowitz v Oblowitz 1953 (4) SA 426 (C) at 434D-G;

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd 1984 (3) SA 623 (A) D at 634-5;

Powell and Thomas v Evan Jones & Co [1905] 1 KB 11 (CA) at 18;

Rectifier & Communications Systems (Pty) Ltd v Harrison and Others 1981 (2) SA 283 (C);

Reid and Others v Warner 1907 TS 961 at 971-4;

Republikeinse Publikasies (Edms) Bpk v Afrikaanse Pers Publikasies (Edms) E Bpk 1972 (1) SA 773 (A) at 782;

Room Hire Co (Pty) Ltd v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 1155 (T) at 1163 (example (c));

S v N 1988 (3) SA 450 (A);

SA Medical & Dental Council v McLoughlin 1948 (2) SA 355 (A) at 380;

Schnehage en 'n Ander v Bezuidenhout 1977 (1) SA 362 (O); F

Transvaal Cold Storage Co Ltd v Palmer 1904 TS 4 at 20, 33;

Treasurer-General v Van Vuuren 1905 TS 588 at 589;

Trust Bank van Afrika Bpk v Western Bank Bpk en Andere NNO 1978 (4) SA 281 (A) at 294;

Turkstra v Kaplan 1953 (2) SA 300 (T) at 304E; G

Bowstead Agency 15th ed at 71, art 18 at 73, art 35 at 127, art 36(2) at 30-1, 132 (rule (3)), 134-5;

Brunnemans Commentarius in quinquaginta libros Pandectarum 17.1.8;

Christie The Law of Contract in South Africa 2nd ed at 333;

H De Villiers and MacIntosh The Law of Agency in South Africa 3rd ed at 315;

De Wet and Van Wyk Kontraktereg en Handelsreg 5th ed vol 1 at 112-3 fn 89, 90, at 114 fn 96, at 386-7;

Faber Rationalia Pandectarum vol 1 at 14, vol 5 at 15;

Halsbury Laws of England 4th ed (re-issue) vol 1(2) para 69 at 52, para 70 I at 52, para 71 at 53, para 75 at 55, para 87 at 63 (fn 3);

Huber Jurisprudence of my Time (Gane's translation) 1.37 at 463;

Hutchinson, Van Heerden, Visser and Van der Merwe Wille's Principles of South African Law 8th ed at 483;

Joubert (ed) The Law of South Africa vol 1 paras 126, 127; vol 17 para 9 J fn 1, 2, 10, 11, 12, paras 11, 13;

1994 (3) SA p658

A Kerr The Law of Agency 3rd ed at 231, 234, 236;

Muhlenbruch Doctrina Pandectarum 2.427 at 420;

Stapleton 'Privity between Principal and Sub-agent' (1909) 26 SALJ 517 at 519, 520, 524 et seq, 526;

Story The Law of Agency paras 201, 256;

Voet Commentarius ad Pandectas 17.1.5 and 8; B

27 SALJ 384

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