THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Case No: 247/08
Reportable

VOLVO (SOUTHERN AFRICA) (PTY) LTD
Appellant

and

GERT YSSEL
Respondent

Neutral citation:
Volvo v Yssel (247/08) [2009] ZASCA 82 (20 August
2009)

Coram:
STREICHER ADP, NUGENT, JAFTA, MAYA JJA
& HURT AJA

Heard:
15 MAY 2009

Delivered:
20 AUGUST 2009

Summary:
Fiduciary duty – circumstances in which such a duty
exists.

_____________________________________________________________________

ORDER
_____________________________________________________________________

On appeal from: High Court Johannesburg (Berger AJ sitting as court of
first instance)

The appeal is upheld with costs that include the costs occasioned by the
employment of two counsel. The order of the court below is set aside and
the following orders are substituted:
‘1.
The respondent is ordered to pay to the applicant the sum of
R775 107 plus interest on that amount at the rate of 15,5 per cent
per annum calculated from 12 September 2006 to date of payment.
2.
The respondent is ordered to pay the costs of the application, which
are to include the costs occasioned by the employment of two
counsel.’

_____________________________________________________________________

JUDGMENT
_____________________________________________________________________

NUGENT JA (STREICHER ADP, JAFTA, MAYA JJA and HURT AJA
concurring)

[1] When it commenced operations in 2000 Volvo (Southern Africa)
(Pty) Ltd (the appellant) was looking for a manager for its information
technology division. A personnel placement agent introduced it to Mr
Yssel (the respondent) and Volvo decided to appoint him to the position.
Yssel did not want to enter into direct employment with Volvo. He
preferred instead to be employed by a labour broker with which he was

then associated – Highveld Personnel (Pty) Ltd1 – which would assign
him to provide his services to Volvo. Volvo reluctantly accepted that
arrangement and for the next five years or so Yssel worked for Volvo on
that basis.

[2] In making the necessary arrangements Volvo had no direct contact
with Highveld and dealt solely with Yssel who in turn dealt with
Highveld. The relationship between Volvo and Highveld was regulated
by sequential written agreements, the detail of which is not now
important. The effect of the agreements, essentially, was that upon receipt
of monthly invoices Volvo would pay Highveld a fee for the services of
Yssel, and Highveld would in turn be responsible for remunerating Yssel.
The services that were to be rendered by Yssel were described in the
various contracts as follows:
‘The management of the [Information Technology] infrastructure of [Volvo] by
means of:
User Support
User Training
Investigation and development of new [Information Technology] processes to stay
abreast with technology
Liaison with Volvo information technology – Sweden
Staff management
Liaison with local suppliers
Work in close conjunction with line managers.’

[3] By 2004 there were six other personnel in the information
technology division. They were similarly employed by labour brokers
who assigned their services to Volvo. Mr van Rensburg, Mr van Rijswijk
and Mr du Plessis were employed by a labour broker known as

1 Highveld Personnel (Pty) Ltd was later taken over by a Dutch company and became known as
Highveld PFS but I will refer to them interchangeably as Highveld.

Optimising Systems. Mr Steyn and Mr Streak were employed by Interg8
IT. Mr Coop was employed by ITSS.

[4] In about the middle of 2004 Yssel approached the Human
Resources Manager of Volvo, Ms van Eeden, and told her that some of
the personnel were unhappy with their labour brokers and that he could
arrange for all the personnel to transfer to Highveld at no extra cost to
Volvo. Yssel suggested the same to all the personnel concerned, pointing
out that their remuneration could be more favourably structured if they
were to transfer to Highveld. Volvo and the personnel were agreeable,
and Yssel attended to making the necessary arrangements.

[5] A written master agreement (called a ‘temporary service
agreement’) was concluded between Volvo and Highveld to regulate the
new arrangement. It provided that Highveld would supply the services of
personnel to Volvo in return for a monthly fee that was to be stipulated in
each case in an annexure to the agreement (called a ‘confirmation of
assignment’). At various times between August 2004 and April 2005
Yssel accompanied each of the personnel to the offices of Highveld
where they were introduced to Ms Pieterse (Manager: Marketing and
Support) and each signed a ‘confirmation of assignment’. They all said
that they were given to understand that from the moneys received from
Volvo in respect of their services Highveld would retain a fixed charge of
about R425 per month and an administration fee of 3% of their earnings.
None was apparently pertinently aware of the rate at which their services
were being charged to Volvo.

[6] Volvo again had no direct contact with Highveld in making these
arrangements and dealt at all times through Yssel who acted as what he

called a ‘facilitator’ or ‘intermediary’ between Volvo and Highveld. Once
the new arrangements were in place Highveld would send invoices to
Yssel each month for the services of the various personnel and Yssel
would submit them for payment to the relevant department of Volvo.

[7] Unbeknown to Volvo, and to the personnel concerned, a large part
of each monthly payment that was being made by Volvo was ending up
in the pocket of Yssel. What Yssel had not disclosed to Volvo, nor to the
personnel concerned, was that he had agreed with Pieterse that he would
be paid what he called a ‘commission’ if he arranged for the personnel to
transfer to Highveld. He had also agreed with her that the matter of the
commission should not be discussed with the personnel or with Volvo.

[8] The amounts that were received by Yssel were substantial. In
January 2006, for example, Volvo paid R27 400 to Highveld for the
services of Van Rensburg, from which Van Rensburg was paid R12 000
and the balance of R15 400 went to Yssel. In other cases his portion was
somewhat lower but overall he was receiving about 40 per cent of the
moneys that were being paid to Highveld.

[9] All this came to light at the end of 2005 when Steyn came across a
document reflecting the discrepancy between the amount that was being
paid by Volvo for his services and the amount of his remuneration. Not
satisfied with the explanation for the discrepancy that he received from
Yssel he investigated further and discovered other documents to similar
effect, whereupon he reported the matter to senior personnel of Volvo.

[10] The matter came to the attention of Van Eeden in January 2006 and
she arranged a meeting with Pieterse. This was the first time that Van

Eeden had direct dealings with anyone from Highveld. Before then all
dealings between Volvo and Highveld had taken place through the
‘facilitation’ of Yssel. When Pieterse was confronted with the
discrepancies she at first denied knowledge of payments having been
made to Yssel but later acknowledged that such payments had been made.
After the meeting, as they left the building, they encountered Yssel, who
asked Pieterse why she was at Volvo’s premises. Pieterse told him that
she could not speak to him then but would do so at another time. Later
that day Van Eeden and another senior employee of Volvo were in the
process of preparing a letter suspending Yssel when he delivered a letter
of resignation. The six personnel subsequently terminated their
arrangements with Highveld and entered the direct employment of Volvo.

[11] Investigations by an internal auditor of Volvo revealed that from
August 2004 to January 2006 Volvo paid R1 967 900 to Highveld for the
services of the personnel (excluding Yssel) of which they received
R1 087 650. From the balance of R889 250 Highveld had deducted its
own commissions of R114 143 and the balance of R775 107 had been
paid to Yssel.

[12] Volvo sued Yssel in the High Court at Johannesburg for payment
of that amount, alleging that it had been earned in breach of a fiduciary
duty that he owed to Volvo to act in its interests and not in his own. The
high court (Berger AJ) dismissed the claim and Volvo now appeals
against that order with the leave of that court.

[13] Over a century ago in Robinson v Randfontein Estates Gold Mining
Co Ltd2 Innes CJ expressed, in general terms, the legal principle that is
applicable in a case of this kind as follows:
‘Where one man stands to another in a position of confidence involving a duty to
protect the interests of that other, he is not allowed to make a secret profit at the
other’s expense or place himself in a position where his interests conflict with his
duty. The principle underlies an extensive field of legal relationship. A guardian to his
ward, a solicitor to his client, an agent to his principal, afford examples of persons
occupying such a position. As was pointed out in The Aberdeen Railway Company v
Blaikie Bros. (1 Macqueen 474), the doctrine is to be found in the civil law (Digest
18.1. 34.7), and must of necessity form part of every civilised system of
jurisprudence’.

[14] Moneys that are earned secretly in breach of a duty of trust fall to
be disgorged by the fiduciary and there is little room for him or her to
avoid that consequence. Recently in Phillips v Fieldstone Africa (Pty)
Ltd3 Heher JA summarised the position, as it has been articulated in
various decided cases, as follows:
‘The rule is a strict one which allows little room for exceptions … It extends not only
to actual conflicts of interest but also to those which are a real sensible possibility …
The defences open to a fiduciary who breaches his trust are very limited: only the free
consent of the principal after full disclosure will suffice … Because the fiduciary who
acquires for himself is deemed to have acquired for the trust, … once proof of a
breach of a fiduciary duty is adduced it is of no relevance that (1) the trust has
suffered no loss or damage … ; (2) the trust could not itself have made use of the
information, opportunity etc … or probably would not have done so … ; (3) the trust,
although it could have used the information, opportunity etc has refused it or would
do so … ; (4) there is not privity between the principal and the party with whom the
agent or servant is employed to contract business and the money would not have gone
into the principal’s hands in the first instance … ; (5) it was no part of the fiduciary’s

2 1921 AD 168 at pages 177-178.
3 2004 (3) SA 465 (SCA) para 31.

duty to obtain the benefit for the trust … ; or (6) the fiduciary acted honestly and
reasonably … (although English and Australian Courts make some allowance for
equity in calculating the scope of the disgorgement in such cases).

[15] There is no dispute that Yssel received the sum of R775 107 in the
circumstances that I have referred to. He alleges, however, that he did not
stand in a fiduciary relationship towards Volvo, and was thus entitled to
arrange for and earn the commission. His central contention in that regard
– it is the recurrent refrain throughout his answering affidavit – is that he
had no contractual privity with Volvo and thus had no duties towards it at
all.

[16] While certain relationships have come to be clearly recognised as
encompassing fiduciary duties there is no closed list of such relationships.
As pointed out in Randfontein Estates,4 and in numerous other cases in
this country and abroad, whether a particular relationship should be
regarded in law as being one of trust will depend upon the facts of the
particular case. Courts have nonetheless often sought to identify features,
or characteristics, that impart fiduciary qualities to a relationship. In
Hodgkinson v Simms,5 for example, La Forest J, writing for a majority of
the Supreme Court of Canada, said the following of ‘situations in which
fiduciary obligations, though not innate to a given relationship, arise as a
matter of fact out of the specific circumstances of that particular
relationship’:
‘In these cases, the question to ask is whether, given all the surrounding
circumstances, one party could reasonably have expected that the other party would
act in the former’s best interests with respect to the subject-matter at issue. Discretion,

4 Page 180.
5 (1995) 117 DLR (4th) 161 at 176f – 177b.

influence, vulnerability and trust were mentioned as non-exhaustive examples of
evidential factors to be considered in making this determination.
Thus, outside the established categories, what is required is evidence of a mutual
understanding that one party has relinquished its own self-interest and agreed to act
solely on behalf of the other party. This idea was well-stated in the American case of
Dolton v Capitol Federal Sav. and Loan Ass’n, 642 p 2d 21 (Colo. App. 1982), at
pp 23-24, in the banker-customer context, to be a state of affairs
… which impels or induces one party “to relax the care and vigilance it would and should
have ordinarily exercised in dealing with a stranger.” … [and] … has been found to exist where there is
a repose of trust by the customer along with an acceptance or invitation of such trust on the part of the
lending institution.’

[17] Features of the kind that were mentioned in that extract – the
discretion that one party may have in relation to the affairs of another, the
influence that he or she is capable of asserting, the vulnerability of one
person to another, the trust and reliance that is placed in the other –
receive frequent mention in judgments on the subject of whether a
relationship was one of trust.6 But such references do not seem to me to
advance materially what was stated in Randfontein Estates and do little
more than to identify factors that were considered to be relevant to the
enquiry in the particular case. And while the extract that I have referred to
might suggest that a ‘mutual understanding’ between the parties
concerned is a prerequisite for such a relationship to exist I think that
would be to approach the matter too restrictively. What is called for is an
assessment, upon a consideration of all the facts, of whether reliance by
one party upon the other was justified in the circumstances. As pointed

6 See, for example, Canadian Aero Service Ltd. v O’Malley (1974) 10 DLR (3d) 371; Pilmer v Duke
Group Ltd (in liq) (2001) 180 ALR 249 (HC of A); Phillips v Fieldstone Africa (Pty) Ltd, above, esp
482C-D. See, too, J.R.M. Gautreau ‘Demystifying the Fiduciary Mystique’ (1989) 68 Canadian Bar
Review 1 and the references cited.

out by Gibbs CJ in the High Court of Australia in Hospital Products
Limited v United States Surgical Corporation:7
‘I doubt if it is fruitful to attempt to make a general statement of the circumstances in
which a fiduciary relationship will be found to exist. Fiduciary relations are of
different types, carrying different obligations … and a test which might seem
appropriate to determine whether a fiduciary relationship existed for one purpose
might be quite inappropriate for another purpose.’

[18] Contractual duties owed by one party to another will no doubt
often go a long way towards defining whether the relationship is one of
trust but contractual privity is not indispensable to such relationships, as
correctly observed by the court below. Having said that, the court below
went on to find that Yssel indeed owed fiduciary duties to Volvo, but
only in relation to the exercise of the specific functions that were assigned
to him in the various agreements between Volvo and Highveld (the
functions I have listed in para 2 above). Because his functions did not
extend to the recruitment, employment or acquisition of staff, so the court
reasoned, he was under no duty to act in the interests of Volvo when he
engaged in the activities with which we are now concerned. That seems
to me to view the matter too narrowly.

[19] Yssel occupied the most senior position in Volvo’s information
technology division. That there was no contractual privity between him
and Volvo seems to me to be of little consequence. It was the position to
which he was appointed, rather than the nature of the contractual
relationship, that defined what Volvo could expect of him. He had not
been brought in to its offices so as to provide him with an opportunity to
hawk his own wares but had been brought there in the interests of Volvo.

7 (1984) 156 CLR 41 (HC of A) 69.

That his functions might not have included recruiting, employing and
acquiring staff does not seem to me to be material. No doubt he could not
be compelled to accept instructions to engage himself in matters of that
nature. But the fact is that he did engage himself in arranging matters
between Volvo and its staff. And in doing so he did not purport to be
doing so as a stranger who was conducting his own affairs. He did so as
an incident of his function as manager of the division. Indeed, there can
be no doubt that Yssel was well aware that it was precisely because he
was the manager of the division that Volvo could be induced to ‘relax the
care and vigilance it would and should have ordinarily exercised in
dealing with a stranger’.8

[20] Yssel was well aware that Van Eeden had made no independent
enquiries relating to the arrangement with Highveld and was acting
entirely upon what she was told by him. That he found it necessary to
secure an agreement of secrecy from Pieterse makes it abundantly clear
that he was well aware that Van Eeden believed that he was arranging
matters pursuant to his ordinary managerial duties and not for his own
account. In short, he was well aware that Van Eeden did not consider
herself to be dealing at arm’s length with an independent broker who was
arranging matters on his own account, but was dealing with the manager
of the division concerned. It was only because Yssel was the manager
that the transaction came about at all. I have no doubt that Yssel was in a
position of trust when he engaged himself in the matter and was not
entitled to allow his own interests to prevail over those of Volvo. He is
obliged in those circumstances to disgorge his secret commissions and the
appeal must succeed.

8 Dolton’s case, quoted in Hodgkinson v Simms, above.

[21] The appeal is upheld with costs that include the costs occasioned
by the employment of two counsel. The order of the court below is set
aside and the following orders are substituted:
‘1.
The respondent is ordered to pay to the applicant the sum of
R775 107 plus interest on that amount at the rate of 15,5 per cent
per annum calculated from 12 September 2006 to date of payment.
2.
The respondent is ordered to pay the costs of the application, which
are to include the costs occasioned by the employment of two
counsel.’

_________________
R W NUGENT
JUDGE OF APPEAL

APPEARANCES:

For appellant:
F G Barrie SC

G J Nel

Instructed by:

Bowman Gilfillan Inc, Johannesburg

McIntyre & Van der Post, Bloemfontein

For respondent:
C J Nel

Instructed by:

Malherbe Rigg & Ranwell Inc, Boksburg

Symington & De Kok, Bloemfontein