Hansa Silver (Pty) Ltd v Obifon (Pty) Ltd t/a The High Street Auction Company

The sellers owned Thaba Phuti Safari Lodge, a game lodge sold as a going concern. They mandated Obifon (Pty) Ltd t/a The High Street Auction Company to sell the lodge by public auction, subject to a reserve price of R25 million, and expressly authorised the auctioneer to bid on their behalf up to the reserve. The auction was held on 2 November 2011 with prior notice that the auctioneer could bid for the seller. Mr Ichikowitz, acting for a company to be formed (later Hansa Silver (Pty) Ltd), registered as a bidder and acknowledged the auction rules. During the auction, the auctioneer placed bids on behalf of the sellers below the reserve price. The seller later reduced the reserve to R20 million, which Mr Ichikowitz bid and the property was sold. Written sale agreements were concluded and commission of R2.28 million was paid to High Street. After viewing video footage of the auction, the purchasers alleged that the auctioneer engaged in undisclosed vendor bidding amounting to sham bidding and misrepresentation, rendering the sale agreements invalid. They sought to avoid the contracts and reclaim the commission. The High Court dismissed their application, and the matter came before the Supreme Court of Appeal.

The purchasers’ appeals were dismissed with costs, including the costs of two counsel. The cross-appeal by High Street was upheld, and the order was supplemented to direct the purchasers jointly and severally to pay the costs of the third party proceedings, including the costs of two counsel.

The case clarifies South African law on vendor bidding at auctions under the Consumer Protection Act. It confirms that, where prior notice is given, auctioneers may bid on behalf of sellers up to the reserve price without having to identify each vendor bid explicitly at the time. The judgment draws an important distinction between lawful vendor bidding and unlawful sham bidding, and provides guidance on when non-disclosure may amount to misrepresentation. It is a leading authority on auctions, reserve prices, and the interpretation of s 45 of the CPA.