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[2016] ZAGPJHC 45
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Lushaka Investments (Pty) Ltd v JHI Properties (Pty) Ltd (A5085/2014) [2016] ZAGPJHC 45 (31 March 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
(GAUTENG
LOCAL DIVISION, JOHANNESBURG)
Case
number: A5085/2014
DATE:
31 MARCH 2016
In
the matter between:
LUSHAKA
INVESTMENTS (PTY)
LTD
.......................................................................
APPELLANT
And
JHI
PROPERTIES (PTY)
LTD
.....................................................................................
RESPONDENT
J
U D G M E N T
SATCHWELL
et
VAN OOSTEN JJ:
INTRODUCTION
With
the leave of the court
a
quo
,
this is an appeal and a cross-appeal against the judgment and order
of Wright J of this division handed down on 17 September
2014. At
issue is the interpretation of an agreement of mandate
[1]
entered into between the owner of a property to be sold, the
appellant (‘Lushaka’), and the agent appointed to
procure such sale, the respondent (‘JHI Properties (Pty)
Ltd’).
The
parties concluded the mandate (presented on 26 February 2013 and
signed on 28 February 2013) in terms of which JHI undertook
to
procure a purchaser for Lushaka (described as ‘the Landlord’),
of the World Trade Centre. The mandate was to be
in force for a
period of six months. The relevant portions of the mandate read:
‘
This letter
confirms the terms of a mandate to ourselves (as Agent) to procure a
purchaser for your (the Landlord’s) property
……’
‘
3.1 The
Landlord hereby authorizes and gives permission to the Agent to offer
the Property for purchase to the parties nominated
as per Annexure A
attached hereto.’
‘
3.2 JHI is
exclusively appointed to negotiate a transaction with the parties
referred to in 3.1.’
3.4.2 The
appointment will remain in force for a period of 6 (six) months and
upon expiry of that period or a valid sale of
the Property
being concluded, whichever occurs first, this mandate will
automatically expire and, be of no further force and effect.’
‘
4. We shall
use our best endeavours to procure an offer for the Property at the
best possible terms and conditions for your acceptance…..’
‘
6. In the
event of a sale being concluded over the Property during the term of
this mandate or at any time thereafter with any party
introduced to
the Property by ourselves, you shall pay commission to us calculated
in accordance with out tariff…..
[2]
‘
8. No
variation or amendment of this mandate shall be enforceable unless
reduced to writing and signed by both parties.’
Amongst
the nominated prospective purchasers, contained in Annexure A, was
an entity described as SA Corporate Real Estate Fund
(‘SA
Corporate’).
Pursuant
to the mandate, JHI marketed the property and, on 28 February 2013,
procured an offer from one of the entities on the
list, Vividend
Income Fund (‘Vividend’), which was presented to
Lushaka. Lushaka referred this offer to its attorneys
and various
amendments to the Vividend offer were proposed by Lushaka. JHI
vigorously pursued the offer and remained in discussions
with
Vividend in regard thereto.
However,
unknown to JHI, Lushaka had, prior to the conclusion of the mandate,
appointed another agency, Penny Brothers Brokers
and Valuers (Pty)
Ltd (‘Penny Brothers’) in October 2012, to solicit
offers for the purchase of the property. During
October 2012 Penny
Brothers had introduced the property to SA Corporate, which as I
have alluded to is one of the entities identified
as one of the
prospective purchasers in annexure A whom JHI was exclusively
mandated to approach and which were the only potential
purchasers
whom JHI could approach in terms of the mandate.
The
upshot was that Penny Brothers were, from October 2012, marketing
the property and had already engaged in discussions with
SA
Corporate whilst, from February 2013, JHI enjoyed an exclusive
mandate to market the property to nominated prospective purchasers
which included SA Corporate.
On
20 March 2013 Lushaka was presented with a first offer from SA
Corporate by Penny Brothers. Amendments were required to be
made to
the offer and on 28 March 2013, Lushaka accepted the latest version
of the offer from SA Corporate presented to Lushaka
by Penny
Brothers. On 3 April 2013, Lushaka informed JHI and Vividend that
the Vividend offer was declined and confirmed that
an offer from SA
Corporate had been accepted.
THE LITIGATION
JHI’s
main claim is for damages. JHI alleges that Lushaka breached the
mandate in a number of respects and that, by reason
of such breach,
JHI was prevented from performance which would have included an
offer from SA Corporate. As a result JHI claims
to have suffered
damages in an amount equal to the commission on the transaction
concluded through the agency of Penny Brothers
as it was agreed.
JHI’s
second claim, with reliance upon the mandate, is based on an alleged
tacit or implied term in the mandate that JHI
was entitled to
commission in the event of a sale with any party included in
Annexure A and, the sale of the property having
been concluded
between Lushaka and SA Corporate, it was entitled to the commission
as agreed.
At
conclusion of the trial the learned judge in the court
a quo
found:
‘
16. I am not
convinced by the main claim [first claim: damages]. The plaintiff’s
evidence did not go beyond proving that it
would have received an
offer from SA Corporate. The plaintiff’s evidence did not go so
far as to suggest that the offer would
have been accepted by the
defendant. This failure includes the failure to prove a price at
which a deal would have been struck.
It follows that damages have not
been proved.
‘
19. [Second
claim: commission]. There would be no point in SA Corporate being
listed in Annexure A other than to identify it as
one of the
potential buyers in respect of whom the plaintiff held an exclusive
mandate for 6 months. In my view the parties intended,
in their
written agreement of mandate, that commission would be payable when
the defendant sold the property to SA Corporate at
any time during or
after the term of the mandate to any buyer listed in Annexure A. On
the defendant’s interpretation of
the mandate, the plaintiff,
because it had not introduced SA Corporate to the property, would
never have the potential to earn
commission on the sale of the
property by the defendant to SA Corporate. The notion that the
plaintiff was mandated to canvass
SA Corporate without the prospect
of commission is absurd. Accordingly, the plaintiff’s reliance
on the alleged tacit or
implied term is unnecessary. I uphold the
alternative claim.’
The
learned judge however found for JHI on its second claim for
commission. Lushaka’s main appeal is against that finding.
If
Lushaka is successful in its appeal, then JHI’s cross-appeal
against the adverse finding of the court
a quo
in respect of
the first (damages) claim needs to be adjudicated.
LUSHAKA’S
APPEAL ON THE CLAIM FOR COMMISSION
The
main ground of Lushaka’s appeal is that JHI could not have
become entitled to receive commission for the sale of the
property
because it had neither introduced SA Corporate to the property nor
was it the effective cause of the sale.
13.
The authorities relied on by Lushaka persuasively show that the
well-known concept of ‘effective, efficient or dominant
cause’
of the sale of the property is necessarily incorporated into the
mandate by the words in clause 6 of ‘introduced
to the Property
by ourselves’. But this court need not dwell on this aspect any
further since it is common cause that JHI
did not introduce SA
Corporate to Lushaka and therefore cannot be considered as the
introducing party in any sense of the phrase.
The
learned judge in the court
a quo
did not find it necessary to
make any decision on the alleged implied or tacit term as contended
for by JHI in its particulars
of claim. Instead the court found that
the parties had intended, in their agreement, that JHI would be
entitled to commission
when the property was sold to any buyer
listed in Annexure A, notwithstanding that JHI had not been the
effective cause of the
sale to such buyer. The
ratio
for this
finding was that any other interpretation of the mandate would mean
that JHI, ‘because it had not introduced SA
Corporate to the
property, would never have the potential to earn commission on the
sale of the property by the defendant (Lushaka)
to SA Corporate. The
notion that the plaintiff was mandated to canvass SA Corporate
without the prospect of commission is absurd’.
15.
We are unable to agree with the reasoning or the
ratio
as set
out in the judgment of the learned judge in the court
a quo
.
16.
The wording of the mandate is clear. Clause 6 specifically limits the
payment of commission by Lushaka to JHI to a sale
‘with any
party
introduced
to the Property by ourselves’ [emphasis
added]. It follows from the wording that it is not
any sale
concluded during the period of the mandate which would entitle JHI to
payment of commission but only a sale in which JHI had effected
the
introduction of the purchaser.
17.
The wording in clause 6 read in context of the mandate as a whole,
limits the earning of commission in two ways: the purchaser
must be
one of the parties listed on Annexure A because those are the only
parties which JHI was entitled to approach
and
the purchaser
must have been introduced by JHI to Lushaka.
18.
To
find another intention on behalf of both contracting parties would be
a direct contradiction of the express terms to which they
contracted
in clause 6 of the mandate and would ‘subvert the meaning to be
derived from a consideration of the language of
the agreement
only.
[3]
The
absurdity found by the learned judge
a quo
is difficult to
comprehend. JHI was not mandated to canvass SA Corporate without the
prospect of commission as the learned judge
appears to have
understood. Its commission was subject to introducing SA Corporate
and a sale resulting. Clause 6 is very clear
as to the requirements
for commission. Firstly, there must be a party introduced to the
property by JHI and secondly, a sale
must be concluded between the
party who was introduced to the property by JHI and Lushaka. JHI was
not expected to work without
the prospect of commission.
JHI
contends for an implied or tacit term in the mandate that JHI need
not be the introducing agent. Incorporation of such term
would
evidently be distinct from and in contradiction to the express
wording of the mandate which, as I have stated, requires
JHI to be
the introducing agent.
However,
JHI sought to find a peaceful coexistence between the finding of the
court
a
quo
and the contrary wording of the mandate. We are unable to agree. It
is difficult to conceive how such co-existence could exist.
The
submission would attribute a meaning to clause 6 to the effect that
commission would be paid to JHI in the event of a sale
being
concluded ‘with any party introduced to the property by JHI
or
(as
counsel would have it)
introduced
by anyone else in the whole wide world’
.
In short, JHI contends that the requirement that commission is only
payable to JHI should it have introduced the purchaser ought
to
change to mean that commission be payable to JHI should any other
individual or entity have introduced the purchaser. Rewriting
of
clause 6, as contended for, would import into the agreement a term
which is quite contrary to its express wording and therefore
nullifies that which was expressly agreed by the parties.
[4]
It
is our view that the appeal must succeed.
JHI’S CROSS
APPEAL ON THE CLAIM FOR DAMAGES
23.
The cross appeal is premised on JHI’s contention that, were it
not for the multiple breaches of
Lushaka, JHI ‘would have
presented an offer for the purchase of the property from a willing
and able purchaser including
an offer from SA Corporate Real Estate
Fund’ for the price eventually secured and, ‘as a result
of Lushaka’s
aforesaid breaches and conclusion of the aforesaid
Agreement of Sale’, JHI has suffered damages in an amount
equivalent to
the commission which would have been earned.
Subsequent
to hearing of the appeal, we received further heads of argument from
Lushaka to which JHI was given the opportunity
to respond.
BREACH BY LUSHAKA
There
is no dispute, and counsel for Lushaka conceded, that Lushaka acted
in breach of the mandate. In essence, Lushaka’s
breach
consisted of selling the property through the agency of Penny
Brothers while the exclusivity afforded to JHI in terms
of the
mandate, was still in force. Applied to the facts of this matter
Lushaka’s breach can be divided into the following
components:
Firstly,
Lushaka allowed another agent to market this property without
restriction as to prospective purchasers even though
it had granted
an exclusive mandate to JHI in respect of identified prospective
purchasers. Lushaka did not inform Penny Brothers
of the existence
of the exclusive mandate with JHI in respect of those entities
listed on Annexure A.
Secondly,
Lushaka allowed SA Corporate to remain on the list of nominated
prospective purchasers to which JHI was solely entitled
to make an
approach and enter into negotiations when it knew that Penny
Brothers was in contact with SA Corporate. The witness
for the
appellant, Aquino, denied having been aware of the approach to SA
Corporate by Penny Brothers until he was presented
with the first
SA Corporate offer on 20 March 2013. He did not then inform JHI of
the interest expressed by SA Corporate through
the agency of Penny
Brothers or take any steps of disclosure to JHI or procure
amendment of the mandate (for example, by attempting
to obtain the
consent of JHI to delete of SA Corporate from Annexure A).
Third,
Lushaka allowed Penny Brothers to continue working with SA
Corporate contrary to the exclusive mandate. Having received
the
first notification of interest by SA Corporate when the 20 March
offer was presented, Aquino negotiated further until
the
final offer of SA Corporate of 28 March was presented and then
obtained a special resolution of the Board of Directors
of Lushaka
authorizing acceptance of the offer on 3 April. During this period,
Aquino knew of and was actively involved in
the transaction with SA
Corporate but failed to inform JHI thereof.
Fourth,
JHI had presented an offer from Vividend on 28 February, the very
day the mandate was signed. Aquino’s response
was to instruct
JHI to attempt to negotiate a better offer from Vividend. He
moreover submitted the Vividend offer to his attorney
for advice,
which was indeed forthcoming in that certain amendments were
proposed and these were passed on to JHI. The Vividend
offer was
still in play when Lushaka accepted the offer from SA Corporate.
Lushaka only informed JHI that the Vividend offer
was rejected on 3
April. During all this time, Aquino was negotiating with Penny
Brothers and SA Corporate contrary to the
terms of the mandate.
Fifth,
Aquino conceded that he kept the work of Penny Brothers, the offer
from SA Corporate, the negotiations with SA Corporate,
and the
further offer from SA Corporate ‘secret’ from JHI
because ‘I did not want to jeopardise this transaction’
and ‘I wanted to make sure that the deal would not be
destroyed or killed by competing offers’.
Sixth,
Lushaka accepted the revised offer from SA Corporate through the
agency of Penny Brothers notwithstanding the exclusivity
that JHI
still enjoyed in terms of the mandate.
On
a conspectus of all these facts there is ample support for the
summary by JHI in its particulars of claim: ‘The defendant
[Lushaka] prevented the plaintiff [JHI] from negotiating with, and
obtaining an offer from, SA Corporate Real Estate Fund, by
receiving, entertaining and ultimately accepting an offer for the
purchase of the property from SA Corporate Real Estate Fund,
through
Penny Brothers’.
PREVENTION OF
PERFORMANCE
There
can be no doubt that by accepting the offer presented through Penny
Brothers, Lushaka rendered it impossible for JHI to
continue with
its mandate.
[5]
It
was no longer possible for JHI to approach any of the nine remaining
entities listed on Annexure A, market the property to
them, procure
offers or expressions of interest, negotiate or discuss any aspect
of such offers and present them to Lushaka.
As correctly pleaded, it
was not only SA Corporate whom JHI could no longer approach but any
willing and able purchaser which
might have been one or more of the
nine other entities on the list of prospective possible
purchasers whom only JHI was
allowed to approach.
Lushaka
accordingly, through its breaches, rendered further performance by
JHI impossible.
DAMAGES
30.
JHI, as the aggrieved party in respect of Lushaka’s breach of
contract, is entitled to damages. JHI pleads that
it was deprived of
its contractual right to deal with SA Corporate as a potential
purchaser of the property thereby effectively
preventing it from
being able to perform its exclusive mandate. The damages claimed by
JHI is an amount equal to the commission
on the gross purchase price
paid by SA Corporate to Lushaka in respect of the property. Lushaka
contends that it is insufficient
for JHI to plead a breach resulting
in a frustration of JHI’s own abilities to have procured an
offer from SA Corporate or
any other entity listed on Annexure A, and
to have secured an agreement of sale between SA Corporate and
Lushaka. It further argues
that JHI has failed to discharge the onus
to prove that it was indeed frustrated by Lushaka’s breach from
obtaining an acceptable
offer from SA Corporate or any other entity.
31.
The damages to which JHI may be entitled are the loss which it
has suffered through not being able to fulfil the mandate by reason
of Lushaka’s breach (
De Coning v Monror Estate and
Investment Co
1974 (3) SA 72
(E) 74H-75). Counsel for Lushaka
sought to suggest that JHI’s claim was for commission and not
damages.
Reliance was placed on the judgment of
Baker J, in
Watson v Fintrust Properties
(Pty) Ltd
1987 (2) SA 739
(C), where
the learned judge explained the nature of the claim, as follows (at
752I-754A):
‘
But in
principle the two actions are different. If the principal, by some
wrongful act or default,
prevents
the agent from earning his
commission the agent is entitled to recover as damages the
actual loss sustained (
Boosé v Zeederberg and Duncan
1918 CPD 283
at 287 bottom;
Vos v Cronje and Duminy
1947
(4) SA 873
(C) at 878 lines 11, 22 - 23;
De Coning v Monror Estate
& Investment Co
1974 (3) SA 72
(E) at 74 bottom - 75
line 2). The agent sues for damages, not for commission for services
rendered. The above reference to the
De Coning
case will make
it clear that there is a distinct difference between the two
forms of action. Addleson J there said:
'The damages to
which the plaintiff may be entitled are not ‘commission which
it would have earned’, but the loss which
it has suffered
through not being able to fulfil the contract by reason of the
defendant's breach.'
‘
The
solatium
awarded to a successful plaintiff in such a case is considered
damages and not commission for services rendered (
De Coning's
case
supra
, cited in
De Villiers and Macintosh (supra
at 411-12); see also
The Firs Investment v Levy Bros Estate
[1984] ZASCA 20
;
1984
(2) SA 881
(A), another 'prevention' case; and
Tony Morgan Estates
v Pinto
1982 (4) SA 171
(W)).
‘
The
difference between the two causes of action was recently emphasized
once again in
Badenhorst v Van Rensburg
1985 (2) SA 321
(T) where the Full Bench,
per
Le Roux J, pointed out at 334
that, if the agent's right to commission is frustrated by the act of
the principal
before
the agent brings about the sale (eg by
the principal having already sold the property
via
another
agent), the plaintiff agent by virtue of the doctrine of fictional
fulfilment can sue for damages. He cannot sue for commission
as
such. His claim is for something quite different, ie damages. The
quantum
might be equal to the commission which he had hoped to
earn, but the cause of action is different. The fact that the
quantum
of the damages may equal the
quantum
of commission is
coincidental. Sometimes the damages may be less than the commission
(cf the
De Coning
case at 74G - 75B;
Vigne v Leo
9 HCG
229;
A G Hendrie & Co v J
McGarry
1936 SR 209)
and no doubt very often they will be the same (cf
Fagan v
Pretorius
1921 CPD 502):
but they are different in nature’.’
32.
In the present matter the quantum of damages claimed by JHI is the
same as the quantum of the commission it would have
earned had it not
been for the prevention of performance by Lushaka. As pointed out in
Watson,
those amounts may coincidentally be the same. But that
does affect the true nature of JHI’s claim for damages. JHI is
entitled
to positive
interesse
: to be placed in the same
position it would have been in had the mandate been performed
(
Wireless Rentals (Pty) Ltd v Stander
1965 (4) SA 753
(T)
754).
33.
JHI, having become entitled to claim damages, must of course prove
its damages. As much is clear from the judgment of
the then Appellate
Division in
Eileen Louvet Real Estate v AFC Property Development
Co
1989 (3) SA 26
(A), where Van Heerden JA, writing for the
court, in regard to a sole agency agreement containing a mandate for
a specific period,
held:
‘…
the
agreement of mandate may obviously not be terminated during its
currency. Should the owner in such a case purport to revoke
the
mandate, the agreement will not be terminated, and should the agent
perform the agreed services,
or show
that, but for an act of the owner frustrating the performance of the
services entitling him to payment of commission, he
would have earned
the same, the realtor will be entitled to commission or damages as
the case may be.’
[emphasis
added]
34.
JHI’s
case, as pleaded, is that had
it not been for the Lushaka’s breach ‘it would have
presented an offer from a willing
and able purchaser, including an
offer from SA Corporate, for a price of R353 000 000’.
Lushaka contends that JHI
has failed to discharge the onus of proving
what it has pleaded. We do not agree. The evidence in chief of
Collins, the general
manager at JHI, was not challenged in cross
examination or refuted by Aquino in his evidence. JHI had a
relationship with SA Corporate
over many years which was still
ongoing and Collins, personally, had a good relationship with SA
Corporate. Mr Van Zyl, of SA Corporate,
was specifically known to
Collins: they had breakfast together in February 2013 and Collins
knew that SA Corporate had cash earmarked
for property acquisitions;
in fact ‘they needed to spend this cash quite urgently’.
There was no reason why SA Corporate
would not deal through JHI in
this particular (or any other) transaction. Ginsberg also confirmed
‘an ongoing business relationship’
between JHI and SA
Corporate.
35.
On the strength of this evidence it was not necessary for JHI to call
a further witness, such as MacKay from SA Corporate,
as was contended
for by Lushaka. The known experience of and relationship between JHI
and SA Corporate, and the willingness of
SA Corporate to deal through
JHI, were not placed in dispute at the trial. Neither was it
necessary to present such evidence from
Aquino since his signature to
the mandate agreement confirmed that Lushaka was prepared to deal
through JHI to obtain an offer
from SA Corporate
36.
It has always been common cause that the purchase price eventually
offered by SA Corporate and accepted by Lushaka, was
acceptable to
both seller and purchaser. To argue, as did Lushaka, that SA
Corporate may not have been willing or able to keep
its offer open
for a period of six months does not accord with the provisions of the
mandate agreement or the facts. The mandate
allowed JHI to proceed
through the list of entities on Annexure A, for the period of six
months. It did not require JHI to obtain
an offer from SA Corporate
or any other entity at the beginning of the six month mandate period
and then to maintain such offer
on hold for a six month period.
Lushaka was free to accept whatever offer was procured from the
entities on Annexure A, through
the services of JHI over the six
month period. It was only because Penny Brothers had, contrary to the
mandate agreement, obtained,
presented and negotiated the offer from
SA Corporate in March that there was an offer by SA Corporate
awaiting a response at that
particular time. Such an offer could have
come through JHI at a later date.
37.
We pause to briefly dispose of an argument raised by counsel for
Lushaka. Counsel submitted that the reference to Gerhard
Van Zyl as
‘the representative’ of SA Corporate in Annexure A,
required proof by JHI that it would have obtained an
offer from SA
Corporate represented by Van Zyl, and no one else, before any
entitlement to damages could arise. It was common cause
that Van Zyl
was no longer the person responsible for such property deals and that
JHI, at the time of Lushaka’s breach,
could not
have introduced the property or finalized any sale through Van Zyl as
the representative of SA Corporate. To afford such
prominence to that
particular reference in Annexure A would not only be unrealistic but
seemingly un-businesslike. This issue was
moreover, not raised in
evidence and this court cannot speculate as to the reason for the
reference appearing in Annexure A. The
fact of the matter is that SA
Corporate was required to be properly represented, and at the time of
signing of the mandate, Van
Zyl was identified in Annexure A as such
person. When Penny Brothers came on board, they negotiated with a Mr
MacKay, as the representative
of SA Corporate and it is common cause
that a valid and binding agreement of sale was concluded.
38.
Lushaka criticizes JHI for not having
introduced
SA Corporate
and submits that JHI failed, as required by the mandate, to use its
‘best endeavours’ to procure the best
possible offer for
the property. JHI in fact, right at the outset, vigorously pursued
the possible successful transaction with
Vivident, which eventually
came to naught. There is nothing to suggest that JHI would not
thereafter, have pursued the other options
that were available to it
in terms of the mandate. There was still, at the time of Lushaka’s
breach, ample time left for
the proper execution of the mandate but
it was prevented from doing so by Lushaka’s breach.
39.
The ‘best endeavours’ argument, latched onto by Lushaka,
lacks merit and, in any event, has no relevancy to
the issue of
damages. By way of background, the mandate requires JHI to use its
‘best endeavours to procure an offer for
the Property at the
best possible terms and conditions for your acceptance…’
At the trial, the process adopted by
and the performance of JHI were
criticized in the cross examination of both Collins and Ginsberg, as
well as in the evidence in
chief of Aquino. However, no breach of the
mandate was pleaded by Lushaka, nor adverted to during the trial, nor
raised in the
Notice of Appeal or the Application for Leave to
Appeal. However, the argument is now advanced that JHI failed to use
its ‘best
endeavours in execution of this mandate’. This
argument is based upon the urgency experienced by Aquino on behalf of
Lushaka
to sell the property and his understanding of the need for
the creation by JHI of a ‘critical mass’ of offers to
ensure
and expedite the sale of the property. In this regard he
testified:
‘
I wanted to
spread the net as wide as possible to get clients to put up the
office building, because that was our objective…’
‘
My objective
was to try and get as many offers on the table as possible and so I
was certainly happy that JHI was approaching me
to bring offers to
the table…’
‘
My
understanding is when an agent …. It is almost impossible to
have an offer on the table and for that offer to be the best
possible
offer. The only way that you can achieve a higher rate or higher
return on your investments is to have a number of offers
with certain
trims [terms] and conditions on each offer, so, that you can select
the best offer that makes sense and it reaches
the necessary rates to
pay back, in my case I was under pressure to repay the bank.’
‘
I had
interpreted as that JHI on my behalf would be able to approach a
number of different buyers and handle the business of canvassing
and
acquiring multiple offers and presenting them to me as the client.
So, that I could then select on behalf of myself and the
shareholders
of the business the best possible offer because, I can sell the
property once.’
‘
My objective
to sign a mandate was that JHI was instructed to get me multiple
offers from that list that they put on that mandate.’
‘
That [they]
only provided one offer, which was Vividend and they stopped there.
They did not go any further. They did not give me
other offers like I
requested them to do so.’
40.
The reference to ‘critical mass’ has its origin in
an email from JHI, and is nowhere to be found in the mandate. Only
one offer was indeed presented by JHI (the Vividend offer). A six
month period of exclusivity was afforded to JHI within which
to
approach identified prospective purchasers, procure an offer, present
same, negotiate better terms and conditions (including
price) and
conclude a sale agreement. That, in our view, is the context within
which the endeavours of JHI should be evaluated.
It is argued, in the
context of ‘best endeavours’ that JHI’s obtaining
of only one offer was not sufficient and
in fact resulted in JHI
being in breach of the mandate. On the basis of the obligations of
the parties to the mandate being reciprocal,
so the argument went,
JHI was not entitled to claim damages. In neither the trial court nor
this court was a case made out for
reciprocity of obligations.
On
a proper interpretation of the mandate reciprocity of obligations, as
contended for by Lushaka, in our view, does not exist (see
Man
Truck & Bus (SA) (Pty) Ltd v Dorbyl Ltd. t/a Dorbyl Transport
Products and Busaf
(38/03)
[2004] ZASCA
8
;
[2004] 2 All SA 113
(SCA) (25 March 2004) para 11).
41.
A ‘critical mass’ of multiple offers through JHI does not
seem to have been necessary for Aquino at the time
he was negotiating
and then accepted the revised offer from SA Corporate. Firstly, he
testified that he kept secret from JHI the
negotiations with SA
Corporate and the revised offer from SA because ‘I wanted to
make sure that the deal would not be destroyed
or killed by competing
offers’. Secondly, the unchallenged evidence of Collins was
that, after the revised Vividend offer
was sent through to Aquino, he
was informed by Aquino, on 19 March, that there was a cash offer from
an unidentified private fund
on the table that ‘they would move
on to an unconditional deed of sale’ and that ‘his
intention was to accept
another offer’. Thirdly, Aquino’s
own evidence was that he did have a multiplicity of offers to
consider, there was
one from Delta, one from Vunani, another from
Vividend and one from SA Corporate. In short, the critical mass
appears only of importance
insofar as Lushaka wishes to criticize JHI
for not procuring same. But that was not a requirement of the six
month mandate which
had five months to go when the breach occurred.
42.
The issues relating ‘best endeavours’, ‘critical
mass’ and the sale process adopted by JHI are
not issues which
this court is required to decide. It was neither pleaded nor raised
in the application for leave to appeal, it
is not contained in the
mandate and finally, the evidence does not afford any prominence to
it at the time.
43.
We are satisfied that there is sufficient basis upon which this court
can conclude, on a balance of probabilities, that
JHI was equally
willing, able and capable of procuring exactly the same offer
eventually made by SA Corporate, if Lushaka had not
been in breach of
the mandate, rendering it incapable of fulfillment by JHI and if JHI
had been allowed in terms of the mandate
to continue to market the
property and approach SA Corporate. We are unable to agree with
Lushaka’s argument that, as for
the quantum of JHI’s
claim, JHI has confused damages with commission and we can see no
reason why the damages sustained by
JHI should not be found to be the
amount equal to the commission which it was prevented from earning by
reason of the unlawful
actions of Lushaka.
44.
For all these reasons the cross appeal must succeed.
ORDER
45.
In the result the following order is made:
1.
The appeal against the order of the court
a quo
dated 17
September 2014, in respect of the second claim for commission, is
upheld and the order of the court
a quo
is set aside.
2.
The cross appeal against the order of the court
a quo
dated 17
September 2014, in respect of the first claim for damages, is upheld.
3.
The appellant (Lushaka Investments (Pty) Ltd) is ordered to pay to
the respondent (JHI Properties (Pty) Ltd) :
a.
The sum of R 9 million (nine million rand);
b.
Interest on the aforesaid sum at the rate of 15.5%
per annum
from 5 November 2013 to date of payment; and
c.
Costs of the trial and costs of the appeal and the cross-appeal.
KM
SATCHWELL
JUDGE
OF THE HIGH COURT
F
H D VAN OOSTEN
JUDGE
OF THE HIGH COURT
I
agree.
WL
WEPENER
JUDGE
OF THE HIGH COURT
Counsel for
appellant Adv C Badenhorst SC and with him Adv G Fourie
Attorneys
for appellant Strauss Scher Inc
Counsel for
respondent Adv J G Nel.
Attorneys
for respondent Corien Potgieter Incorporated
Date of hearing
17
February 2016
Date
of judgment31 March 2016
[1]
We use the word ‘mandate’ on the same basis as it was
used in
Eileen
Louvet Real Estate v AFC Property Development Co
1989
(3) SA 26
AD 30G,
viz
on the basis that a contract between the owner and the realtor is
not an agreement of mandate but a contract
sui
generis
but, for the sake of convenience, the authority of the realtor may
be denoted as a ‘mandate’.
[2]
It is common cause that ‘ourselves’ and ‘us’
are JHI.
[3]
SA
Mutual Aid Society v Cape Town Chamber of Commerce
1962
(1) SA 598
AD 615E.
4
The term sought to be implied could neither be
said to be one which the parties had in mind but failed to include
in their agreement
or which they would have expressed if they had
considered the situation (see
McAlpine
& Son (Pty) Ltd v Tvl Provincial Administration
1974
(3) SA (A) 531 D-532C.
[5]
See
The
Firs
Investment Ltd v Levy Bros Estate Pty Ltd
[1984] ZASCA 20
;
1984 (2) SA 881
(A) 886, on the meaning of a sole and exclusive
mandate.