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

A superintendent employed by the Northern Metropolitan Local Council, Mr Du Plessis, signed three rental agreements with Company Unique Finance (Compufin) for photocopying and radio equipment, purporting to act on behalf of the Council. The agreements were supported by a resolution signed by his superior, Mr Van Wyk, on the Council’s letterhead, authorising Du Plessis to contract. The equipment was delivered and some payments were made via debit order. The Council later repudiated the agreements, asserting that neither Du Plessis nor Van Wyk had authority to bind it, and demanded repayment. Compufin and its cessionary bank sued the Council, alternatively relying on estoppel based on ostensible authority. It was conceded that Du Plessis lacked actual authority; the dispute centred on whether the Council was estopped from denying his authority.

The appeal succeeded with costs. The High Court’s order granting judgment against the Council was set aside and replaced with an order dismissing the plaintiffs’ claims against the Council with costs, including the costs of two counsel.

The case clarifies the limits of estoppel and ostensible authority in the context of South African local authorities. It affirms that municipalities are not lightly bound by unauthorised acts of junior officials and underscores the need for third parties to verify authority in accordance with statutory governance structures.