Concor Holdings (Pty) Ltd t/a Concor Technicrete v Hermanus Phillipus Potgieter

The appellant manufactured and supplied paving stones to a builder (Mr Van Dyk trading as Polokwane Homes) under a contract that reserved ownership until payment. The builder was constructing a building for the respondent and the paving stones were to be used for paving the parking area. The appellant's salesman (Uys) knew the stones were for the respondent's building site and that a specific 'apricot' color was chosen to match the building. Some stones were collected by the builder and others delivered directly to the site by the appellant. The stones were laid, with some being cut to fit, resulting in wastage. The respondent paid the builder for the works including the paving stones. Had the respondent known of the reservation of ownership clause, he would have ensured the appellant was paid (unchallenged evidence). The builder did not pay the appellant and his estate was sequestrated. The respondent formally admitted the paving stones remained movables. The appellant brought a rei vindicatio action for return of the paving stones.

• Whether the appellant was estopped from vindicating paving stones of which it was the owner but which were in the respondent's possession
• What constitutes a representation by conduct sufficient to found an estoppel
• Whether a representation by conduct must be 'precise and unambiguous' or whether a lesser standard applies
• Whether the appellant's conduct in delivering the paving stones to the building site constituted a representation that the builder was entitled to transfer ownership
• Whether the appellant was negligent in creating the circumstances that led to the estoppel

The appeal was dismissed with costs.

A representation by conduct sufficient to found an estoppel does not need to be 'precise and unambiguous' (the test applicable to representations by words). Instead, for representations by conduct, an estoppel will arise where: (1) the representor should reasonably have expected that the representee might be misled by his conduct, and (2) the representee acted reasonably in construing the representation in the sense in which he did. A rei vindicatio can be defeated not only when the representation made by the owner is that a third party is the owner, but also where the representation is that the third party is entitled to transfer ownership to the representee. Where a supplier of goods knows that the goods are to be incorporated into building works for the ultimate owner, chooses specific goods for that purpose, and delivers them to the site with the expectation they will be permanently installed, the supplier's conduct can constitute a representation that the purchaser is entitled to transfer ownership, thereby estopping the supplier from vindicating the goods even where ownership was contractually reserved.

The court noted that it was unnecessary and undesirable to express a view on whether the 'precise and unambiguous' test is correct for representations made by words, as this issue was not debated before the court. The court observed that even where a representation by conduct is plainly ambiguous, a representee would not be acting reasonably if he chose to rely on one of the possible meanings without making further enquiries to clarify the position. The court respectfully criticized the statement in B & B Hardware Distributors and the decision in Saflec Security Systems as incorrectly formulating the test for representation by conduct. The court noted that the respondent's admission that the paving stones remained movables (and had not become fixtures by accessio) did not detract from the conclusion that they were intended to remain permanently in place.

This case is significant in South African law for clarifying the requirements for establishing a representation by conduct in estoppel cases. It authoritatively establishes that the 'precise and unambiguous' test applicable to representations by words does not apply to representations by conduct. Instead, for conduct-based representations, the test is whether the representor should reasonably have expected the representee to be misled and whether the representee acted reasonably in relying on the representation. The case is important in the context of rei vindicatio claims where ownership has been reserved, establishing that an owner's conduct can estop them from vindicating their property even where there is a valid reservation of ownership clause. It demonstrates that a rei vindicatio can be defeated not only by a representation that a third party is the owner, but also where the representation is that the third party is entitled to transfer ownership. The judgment provides important guidance on when suppliers of building materials may be estopped from reclaiming goods supplied under reservation of ownership clauses.