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[2017] ZAGPJHC 328
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Dorfman and Another v Kimberley House Jewellers (Pty) Ltd and Another (19253/2016) [2017] ZAGPJHC 328 (10 October 2017)
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Case
No. 19253/2016
Reportable
Of
interest to other judges
Revised:
18 October 2017
In
the matter between:
DAWN
PHYLLIS
DORFMAN
First
Applicant
ABE
FLAX
Second
Applicant
and
KIMBERLEY
HOUSE JEWELLERS (PTY)
LTD
First
Respondent
LAWRENCE
ALON
BROWN
Second
Respondent
Case
Summary:
Principal
and agent – Claim by estate agent – whether buyer had
given mandate to estate agent – whether estate
agent who
introduces buyer to a property and to the seller, where sale is
concluded directly between buyer and seller, is effective
cause of
the sale and entitled to commission – whether estate agent
entitled to the standard or prevailing rate of commission.
JUDGMENT
MEYER,
J
[1]
This is an application for estate agent’s commission. The
question is whether the first and second plaintiffs, Ms
Dawn Dorfman
and Mr Abe Flax, who conduct the business of an estate agency in a
partnership, D and A Properties (D&A), are
entitled to recover
from the first respondent, Kimberley House Jewellers (Pty) Ltd
(Kimberley House) the amount of R1,2 million
plus VAT as commission
due under an agreement in respect of the sale of an 18 000 square
metres property in Park, being Portion
614 (a portion of Portion 1)
of the Farm Zandfontein No 42, Registration Division I.R., Province
of Gauteng (the property).
The second respondent, Mr Lawrence
Brown, is the sole shareholder in and director of Kimberley House.
D&A no longer claims
relief against Mr Brown personally.
[2]
Ms Dorfman and Mr Flax are experienced and decorated estate agents.
They share over 65 years’ experience in the
real estate
industry and specialise mainly in sales and rentals in the upmarket
areas of Hyde Park and Sandhurst. Ms Dorfman
had for many years
been friends with the late Mr and Mrs Bahlig. The late Mr
Bahlig was the previous owner of the property.
She had visited
the late Mrs Bahlig regularly and became acquainted with the staff at
the property, including Mr Michael Xulu,
with whom she had a very
good rapport. When the late Mr Bahlig passed away, Ms Dorfman
took special care and attention to
look after Mrs Bahlig, especially
at a time when she became ill and fragile before becoming confined to
a psychiatric ward in Cape
Town. It was during that time that
Ms Dorfman had a falling out with Mr Mark Bahlig, the son of the late
Mr and Mrs Bahlig,
when she had told him to visit his mother.
Her implied criticism of Mr Mark Bahlig created a rift between them.
Mr
Mark Bahlig inherited the property from his late father.
[3]
The estate of the late Mr Bahlig, represented by the executrix in the
estate at the time, Ms Elisabeth Bahlig, had given D&A
a mandate
at the beginning of 2013 to find a seller for the property. It
found one and a written agreement of sale was concluded
at the
beginning of March 2013. The sale price was the sum of R41,5
million and the seller was obliged to pay agent’s
commission in
the sum of R1,5 million on transfer of the property. A deposit
of R5 million was paid, but the purchaser failed
to pay the balance
of the purchase price and the sale was accordingly cancelled.
D&A waived its entitlement to commission
upon cancellation of
that sale.
[4]
The property remained on the market, but Mr Mark Bahlig, who then was
the executor in the estate of the late Mr Bahlig, prohibited
D&A
from marketing the property. Ms Dorfman, however, had been in
contact with the late Mr and Mrs Bahlig’s accountant
for many
years, Mr Walter Bieldt, and also with Ms Wagner, the late Mr and Mrs
Bahlig’s attorney for many years, who also
was appointed as the
conveyancing attorney when the property had previously been sold in
2013. Ms Dorfman had conveyed to
both Mr Bieldt and Mrs Wagner
that she might be able to find a purchaser for the property, but
would not be able to deal with Mr
Mark Bahlig, whom she did not get
on with.
[5]
Ms Dorfman and Mr Flax considered that the best way to sell the
property would be to subdivide it into eight portions.
It was,
according to them, difficult to find a buyer for a property the size
of that property at an asking price of more than R40
million.
Acting without a mandate, D&A appointed a town planner who drew
up plans for such sub-division of the property.
Ms Dorfman and
Mr Flax had a number of contacts who were developers and they were
confident that they would be able to put a consortium
of buyers
together who would buy the subdivided portions. One of the
potential buyers they had identified, was a Mr Heinz
Rynners.
He is active and vastly experienced in the property industry and Ms
Dorfman had business dealings with him before.
[6]
Ms Dorfman contacted Mr Rynners and told him that she had an
excellent opportunity for him to buy 1 800 square meters of land
on
4
Th
Road, Hyde Park, with or without partners. Mr
Rynners showed interest and suggested they meet the next day, 24
March 2015,
to inspect the property. Ms Dorfman then made
arrangements with Mr Xulu (he was also involved in a taxi service) to
meet
her and potential buyers at the property at 5.00 pm the next
day. She confirmed the appointment with Mr Rynners and she
further
informed him that other prospective buyers would also be
attending. Mr Rynners, in turn, contacted Mr Brown, who was
known
to him, and informed him that he was aware of an 18 000 square
metres property in Hyde Park that was available for sale and that
it
might be worth considering having the property subdivided and
rezoned. Mr Rynners informed him that two other persons
had
shown interest in purchasing two of the prospective subdivided
portions. Mr Brown showed interest and Mr Rynners invited
him
to the inspection of the property that had been arranged for the next
day at 5.00 pm.
[7]
As arranged, Ms Dorfman attended at the property at 5.00 pm on 24
March 2015. Mr Rynners, Mr Brown, his brother and other
persons
interested in purchasing the prospective portions of the property,
arrived. Mr Brown met Ms Dorfman and Mr Flax.
Mr Brown
was informed that they did not have a mandate to market the property
and were for some reason strictly prohibited from
doing so.
Everyone present were waiting on the pavement. Mr Xulu arrived
late, at about 6.00 pm. At Ms Dorfman’s
request, Mr Xulu
drove everyone present in his taxi onto the property down a winding
path to the house at the bottom of the garden.
They all viewed
the property for about an hour.
[8]
Mr Brown has a different version of the inspection of the property.
He says that Ms Dorfman and Mr Flax could not set
foot on the
property and were therefore unable to arrange for those present to
gain access to the property. They suggested
that those present
‘peep through the gate’. Mr Rynners, according to
Mr Brown, then approached a gardener, who
worked at the property and
who was also a taxi driver, and arranged for him to take those
present onto the property in his vehicle.
Mr Rynners, Mr Brown,
his brother and the other interested persons were then driven towards
the house and around the property by
the gardener. Ms Dorfman
and Mr Flax ‘stayed outside hidden in their vehicle prior to
and during all of this’.
[9]
Mr Brown’s version on this disputed issue has been refuted in
reply and can, in my view, safely be rejected on the papers.
(See
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
1984
(3) SA 623
(A) at 635A-C.) Ms Dorfman knew Mr Xulu for the past
15 years. She was well connected to him and had, as I have
mentioned,
a very good rapport with him. He deposed to an
affidavit, which forms part of the replying affidavit. He
confirms Ms
Dorfman’s version; that she called him on 23 May
2015, that she told him that she had a number of people who might buy
the
property and that she arranged with him to be present and to give
them access to view the property in the late afternoon on 24 March
2015. He states that he was not contacted by anybody other than
Ms Dorfman to open the gate in order to give those present
access to
the property. He further states that he drove everybody
present, including Ms Dorfman, onto the property.
He does not
know Mr Rynners nor has he ever been in contact with Mr Xulu.
[10]
Nothing much, however, turns on this disputed issue, because it is
common cause that Mr Brown was shown the property by Ms
Dorfman and
Mr Flax, whether it be from the pavement or as described by Ms
Dorfman, Mr Flax and Mr Xulu. As was said by Marais
J in
Aida
Real Estate Ltd v Lipshitz
1971 (3) 871 (W):
‘
The mere furnishing to the
prospective buyer of the principal’s address or the location of
the property offered may be sufficient
to entitle him to claim
commission from the seller, provided a line of cause and effect can
reasonably be traced from the introduction
to the conclusion of the
sale.’
[11]
Ms Dorfman and Mr Brown discussed the potential purchase by him of
the property. Mr Brown was keenly interested to buy
the whole
property and not as part of a consortium of buyers. He said he
would purchase it cash. Ms Dorfman informed
Mr Brown that she
or Mr Flax could not present his offer to the seller, because they do
not have a mandate from the seller.
She undertook to furnish Mr
Brown with the seller’s particulars and a standard form offer
to purchase, which he personally
would have to submit to the seller.
She informed Mr Brown that he would have to offer at least R40
million and ‘stick
to that price’.
[12]
According to Ms Dorfman and Mr Flax, Mr Brown agreed that they would
represent him as his agent in acquiring the property for
R40
million. They say that Ms Dorfman told him that she wants him
to record in writing that he would pay the commission on
the property
if the seller accepted the offer, and that he agreed. Mr Brown
denies this. All he admits is that Ms Dorfman
and Mr Flax ‘indicated
that they wished to be paid an ‘introductory fee’.
[13]
It is further common cause that the next day, 25 March 2015, D&A
provided Mr Brown with D&A’s blank standard
form offer to
purchase and with the contact details of the seller. The email,
dated 25 March 2015, which Mr Flax, on behalf
of D&A, wrote to Mr
Brown, reads as follows:
‘
Good afternoon Larry
It was a pleasure meeting you
yesterday. As discussed, I attach hereto an Agreement of Sale
(Offer to Purchase) as between
yourself as purchaser and the
registered owner of Portion 42 Erf 614, Zandfontein IR which is the
property situated at 63 4
th
Road, Hyde Park measuring 18
233 m2 (site plan enclosed for your reference).
Please complete your offer which you
should submit to Mr Walter Bieldt who can be contacted on 012 665
0636. He is the accountant
and auditor of World Power Products
Pty Ltd where the late Mr Bahlig operated his business and who always
put his complete trust
in the man.
We have dealt with him in the past and
not an easy person to deal with. Please make it clear to him
that whatever offer you
have made excludes agent’s commission
and in these circumstances no commissions are payable by them as
sellers. The
attorney representing the deceased estate is Anna
Wagner and she can be contacted on 012 361 0253 or 012 348 6897.
As discussed
with you, should this deal happen commissions will be
due to us and should be agreed upon between us.
Please call me when you receive this
document to discuss any other issues that you may have in mind.
Please keep me advised
of developments.
Best regards
Abe’
[14]
Mr Brown did not take issue with any statement in this letter,
including the recordal of the discussion with Mr Brown that
‘should
this deal happen commissions will be due to [D&A]’.
Mr Brown, it is common cause, is an experienced
businessman and
property developer, and firm repudiation on his part of the assertion
of the obligation upon him to pay commission
should he succeed in
purchasing the property, would be the norm, if it was not accepted by
him as correct.
[15]
In
McWilliams v First Consolidated Holdings (Pty) Ltd
1982 (2)
SA 1
(A) at 10E-H, the following was said:
‘
I accept that “quiescence
is not necessarily acquiescence” (see
Collen
v Rietfontein Engineering Works
1948
(1) SA 413
(A) at 422) and that a party’s failure to reply to a
letter asserting the existence of an obligation owed by such party to
the writer does not always justify an inference that the assertion
was accepted as the truth. But in general, when according
to
ordinary commercial practice and human expectation, firm repudiation
of such an assertion would be the norm if it was not accepted
as
correct, such party’s silence and inaction, unless
satisfactorily explained, may be taken to constitute an admission by
him of the truth of the assertion, or at least will be an important
factor telling against him in the assessment of the probabilities
and
in the final determination of the dispute. And an adverse
inference will more readily be drawn when the unchallenged
assertion
had been preceded by correspondence or negotiations between the
parties relative to the subject-matter of the assertion.’
[16]
Mr Brown completed and signed the standard deed of sale which he then
submitted to the seller. Once their negotiations
had been
finalised, the attorneys acting on behalf of the seller amended the
agreement. It is clear from a comparison of
the standard form
deed of sale, which D&A had furnished to Mr Brown, and the deed
of sale that was concluded between the seller
and Mr Brown, that the
amendments were not substantial and mostly comprised the insertion of
paragraph headings. The written
agreement of sale was concluded
on 31 March 2015, and in terms thereof Mr Brown purchased the
property from the ‘executor
in the estate of the late Horst
Peter Bahlig’ for a purchase consideration of R40 million.
Clause 14 of the agreement
reads as follows under the heading
‘Agent’s Commission’:
‘
The parties place on record
that the Purchaser was not introduced to the property by an agent and
that no agent was the effective
cause of this sale. There will
therefore be no commission payable as a result of this sale by any
party.
Should an agent
claim commission in respect of the transaction which proves to be
valid and enforceable, the purchaser will be liable
for such
commission payable
.’
(Emphasis
added.)
[17]
On 13 April 2015 at 9.20 am, Mr Flax, on behalf of D&A, wrote an
email to Mr Brown, saying:
‘
Good Morning Larry
Congratulations on your excellent
acquisition. I refer to the telephone discussion Dawn [Ms
Dorfman] had with you a little
while ago when she discussed with you
that we need to get together to sort out the commissions due to us as
referred to in our
email to you of 22 March 2015 (copy attached).
You advised Dawn that this matter will be dealt with on return to
Johannesburg
of your brother who was away for a short while. I
trust that you are now in a position to take this matter forward.
Please telephone either Dawn or myself
so that we can arrange to meet as soon as possible.
Many thanks for your attention.’
Mr
Brown replied at 9.20, thus:
‘
Thanks Abe. The deal is
part of an EL and is subject to approval. I will let you know
when transfer has been done and
we will meet then.’
Mr
Flax replied to Mr Brown’s e-mail at 9.53, saying:
‘
Thanks Larry
We are happy to await the approval of
the Master of the High Court. However the commission issue
should be settled prior to
transfer of the property. In the
meantime please be good enough to let us have a copy of the accepted
Deed of Sale.
Many Thanks
Abe’
[18]
Again, Mr Brown did not repudiate the assertion that the payment by
him of commission is due to D&A. On the contrary,
and by
necessary implication, he acknowledged his obligation to pay
commission by stating that they would meet when transfer of
the
property had been effected, because he was responding to the request
that they ‘need to get together to sort out the
commission due
to’ D&A. The property was transferred and registered
in the name of Kimberley House on 30 June 2015.
On 2 July 2015
at 11.21 am, Mr Brown wrote to D&A:
‘
Dear Dawn and Abe
The sale of the abovementioned
property has been approved.
In light of the fact that we happened
to meet you outside the property and your involvement in the sale has
been minimal we feel
that an amount of R200,000 would be more than
generous compensation for your time.
Please forward us an invoice with your
banking details so that we can arrange the payment.
Kind regards
Larry’
At
11.55 am, Mr Flax replied to Mr Brown, thus:
‘
Dear Larry
Thank you for your letter below.
Your offer is totally unacceptable under any circumstances.
Dawn and I will be discussing
this issue and we expect to be paid a
fair market related commission. We will contact you shortly and
forward you an appropriate
invoice.
Best regards,
Abe.’
[19]
Settlement negotiations followed, but without fruition. In
D&A’s founding affidavit, Mr Flax states that-
‘
. . . Mr Brown has adopted the
position that because [their] involvement in the sale of the property
was in his opinion minimal,
[they] are not entitled to the kind of
commission usually charged by estate agents who act for the (sic)
mandate and are the effective
cause of the sale. In this regard
Mr Brown is incorrect in his assumption.’
Mr
Brown did not take issue with this, save to deny that he is incorrect
in his assumption. Mr Brown, however, is incorrect
in his
assumption. In
Aida
, at 875H, Marais J said that:
‘
[a] commission agent is paid by
results and not by good intentions or even hard work.’
[20]
I now turn to the application of the relevant legal principles to the
facts of this case. In
Bosch v Flower Box (Pty) Ltd
1971 (4)
SA 640
(E), at 643A-C, Addleson J said the following:
‘
An estate agent is, in
practice, in a somewhat different position from most other persons
who render “professional services”.
He acts
sometimes for the buyer and sometimes the seller; unlike most other
professional men, he has no professional rules which
inhibit him from
vigorously soliciting business from both buyer and seller. An
owner of property, who has in fact not directed
his mind to the sale
of his property, may therefore be approached, by an agent who already
has a willing buyer for that property;
and the “seller”
may well not realise that in “allowing” the agent to
introduce the buyer, he may lay himself
open to the claim that he has
employed the professional services of the agent and is liable for the
agent’s commission.
Indeed “both such liability for
commission and the
quantum
thereof are almost
invariably matters of implication and are seldom brought directly to
the notice of the seller until after the
“mandate” has
been “given”.’
[21]
In
Webranchek v LK Jacobs & C0, Ltd
1948 (4) All SA 404
(A), at 406-407, Van den Heever JA said the following about cases
such as the present one:
‘
The difficulty in cases of this
kind is to determine what exactly was agreed between the parties.
Often the arrangement between
the vendor and the commission agent is
made orally and without clear definition of its terms. Yet the
legal results flowing
from the arrangement must necessarily depend on
the nature of the particular mandate. In
Luxor
Ltd. V. Cooper
(1941 (1),
A.E.R. 33
, 40), the LORD CHANCELLOR observed:
“
There is, I think, considerable
difficulty, and no little danger, in trying to formulate general
propositions on such a subject,
for contracts with commission agents
do not follow a single pattern, and the primary necessity in each
instance is to ascertain
with precision what are the express terms of
the particular contract under discussion, and then to consider
whether these express
terms necessitate the addition, by implication,
of other terms. . . . Each case turns on its own facts and the phrase
‘finding
a purchaser’ is itself not without ambiguity.”’
[22]
In
Muller v Pam Snyman Eiendomskonsultante (Pty) Ltd
2001 (1)
SA 313
(C), at 319D-H, Comrie J accepted the following statement of
the law relating to implied contracts in Joubert (ed)
The Law of
South Africa
vol 9 1st re-issue at para 384:
‘
If there is no express
agreement between principal and agent, an implied contract may be
inferred under certain circumstances. If
a person conducts himself in
such a way that from his conduct and from the surrounding
circumstances it can be inferred that he
is in fact authorising an
agent to act on his behalf, then an implied contract of agency comes
into being, but one has to be careful
to guard against assuming that
mere instrumentality in introducing a person who eventually purchases
the principal's property constitutes
an implied contract. An implied
mandate can only be held to exist if the court is able to find that
there was consensus between
the principal and the agent that the
latter should act on behalf of the former. If it cannot be held from
the actions of the principal
that he agreed to employ the agent, then
the impression or belief of the agent that he was so employed is
obviously insufficient
to create a binding contractual relationship
between the parties.
Where the course of dealing between
the parties is such as to leave it open to doubt whether the
principal is employing the agent
to act on his behalf, the agent
cannot rely on an implied mandate since he could and should have made
it clear to the principal
that he would expect him to pay commission
should the mandate be fulfilled.'
[23]
Notwithstanding Mr Brown’s protestations to the contrary, I am
of the view, on a conspectus of the facts of this matter,
that D&A
had an express mandate from Kimberly House, represented by Mr Brown,
to bring about a specified event, which was the
completion of a
binding agreement of sale of the property between the estate of the
late Mr Bahlig and Kimberly House. D&A
made it clear to the
principal, Kimberley House, that it would expect it to pay commission
should the mandate be fulfilled. Mr
Brown, who acted on behalf
of the principal, did not object. But even if I were to accept
Mr Brown’s denial that an
express oral agreement of mandate was
concluded, the ineluctable inference drawn from his conduct and the
surrounding circumstances
– whether the 'no other reasonable
interpretation' test enunciated by Corbett JA in
Standard Bank of
South Africa Ltd and Another v Ocean Commodities Inc and Others
1983
(1) SA 276
(A), at 292B–C, is applied, or the 'most plausible
probable conclusion' test, also laid down by the same
Judge
of Appeal in
Joel Melamed and Hurwitz v Cleveland Estates
(Pty) Ltd; Joel Melamed and Hurwitz v Vorner Investments (Pty)
Ltd
[1984] ZASCA 4
;
1984 (3) SA 155
(A) at 165 – is that he in
fact authorised D&A as agent to act on behalf of Kimberley House
and, therefore, an
implied contract of agency came into being. There
was consensus between Kimberley House and D&A that the latter
should
act on behalf of the former.
[24] D&A vigorously
solicited business from prospective buyers for the property.
The first time Mr Rynners became aware
of the property was when Ms
Dorfman contacted him telephonically and conveyed to him that she had
an excellent opportunity for
him to buy an 18 0000 square metres in
extent property on 4
th
Avenue, Hyde Park, with or without
partners. D&A invited prospective buyers, including Mr
Rynners, who in turn invited
Mr Brown, to view the property on 24
March 2015 pm at the inspection of the property which D&A had
arranged. The access
to and viewing of the property by the
prospective purchasers on 24 March 2015 was arranged by Ms Dorfman
with Mr Xulu.
[25]
D&A facilitated the acquisition of the property by Kimberly
House. Ms Dorfman roused Mr Rynners’ interest in
the
property, who in turn roused that of Mr Brown. But for D&A’s
introduction of the property to Mr Brown, even
though indirectly
through Mr Rynners, he would not have been aware of the existence of
the property. He was invited to inspect
the property on 24
March 2014, which inspection was arranged by Ms Dorfman. He was
favourably impressed at that inspection
of the property. Ms Dorfman
and Mr Flax were introduced to him. He knew he was dealing with
estate agents and that they had
informed Mr Rynners that the property
was for sale. Ms Dorfman gave him access to the property. That
first introduction of
Mr Brown to the seller’s property was the
decisive factor, as is ordinarily the case ‘where nothing
intervenes to prevent
the introduction from leading straight on to
the sale’. (
Barnard & Parry Ltd v Strydom
1946
AD 931
, at 936.)
[26]
Mr Brown knew he was dealing with estate agents who did not have a
mandate from the seller to find a purchaser for the property.
Ms Dorfman told him of the obligation to pay commission to D&A
should a valid agreement of sale be concluded with the owner
of the
property. The parties contemplated ‘no sale, no
commission’. D&A furnished its standard form
deed of
sale to Mr Brown, which form he completed, signed and submitted to
the seller for acceptance. D&A requested him
to make it
clear that the offer excludes agent’s commission and that no
commission is payable by the seller, which is precisely
what he and
the seller agreed. D&A disclosed to Mr Brown who the seller
of the property was. It disclosed the contact
details of the
seller’s representatives whom Mr Brown should approach.
Ms Dorfman and Mr Flax, based on their past
experience of the
property, emphatically advised Mr Brown to offer R40 million for the
property, which he would not have known,
but for their advice, and
that was precisely what he offered and what was accepted by the
seller.
[27]
D&A was under no obligation by Mr Brown to conduct the actual
negotiations or to oversee the completion of the ultimate
contract.
That he undertook to do. D&A had brought Kimberly House and
the seller together; the one ready to purchase
and the other ready to
sell at the price which D&A advised Kimberly House to offer.
As was stated by Van den Heever JA
in
Wesbranchek
, at 403-404:
‘
Both counsel agreed that if
plaintiff had brought defendant and Beretta together and by his
efforts rendered the one ready for selling
and the other ripe for
buying at an agreed price, he cannot be deprived of his commission
merely because the actual deed of sale
was executed under the aegis
of a competitor.’
[28]
D&A has produced and introduced the seller who was ready to sell
and did sell at a figure acceptable to Kimberley House.
Furthermore, this desired result was due to the efforts of D&A,
to which I have alluded to above. The introduction to
the
property and to the seller, albeit indirectly, were the overriding
factors inducing the sale. (See
Aida
at 874G-H.)
Those efforts were the effective cause of the sale. D&A had
discharged its mandate and is entitled to
its commission, because the
sale went through.
[29]
But argues Kimberley House, the agreement relied upon by D&A
requires the parties to negotiate the
quantum
of the
commission payable and in the result the agreement is either void for
vagueness and unenforceable or, if enforceable, precludes
the relief
sought by D&A in these proceedings since the payment of
commission was conditional upon agreement being reached
on the
quantum
of the commission, and that condition had not been
fulfilled. There can be no room, argues Kimberley House, for a
tacit or
implied term if it conflicts with the express provisions of
the agreement. (See
Transnet Ltd v Rubenstein
2006 (1)
SA 591
(SCA), para 18.)
[30]
However, on the totality of the evidence presented in this
application I do not think that D&A’s statement in its
email dated 25 March 2015 – ‘[a]s discussed with you,
should this deal happen commissions will be due to us and should
be
agreed upon between us’ – or the statement in its
founding affidavit – ‘[t]hat a commission was still
to be
agreed between Mr Brown and ourselves does not render the agreement
invalid’ – mean that the consensus of the
parties was
that the payment of commission was conditional on them reaching
consensus on the amount of commission. Mr Flax
states in D&A’s
founding affidavit that the amount of commission was not discussed
and that there was ‘no doubt
in the mind of either Mrs Dorfman
nor myself that the usual commission charged normally on a property
of this price would apply’
and that ‘[a]lthough the rate
of commission was not agreed, both Mrs Dorfman and I believed that
our usual commission would
apply in the circumstances’.
In the answering affidavit Mr Brown ‘admitted that [they] did
not discuss the amount
of the purportedly payable ‘commission’
or introductory fee’. He also states:
‘
I acknowledge that the
applicants indicated that they wished to be paid an introductory
fee. This was however never agreed
to in principle as there
were no terms defining the introductory fee nor was such fee
ascertainable.’
I
have rejected Mr Brown’s version that it was not agreed that
‘commission’ would be due to D&A should the
deal
happen. But I accept that ‘there were no terms defining’
the commission nor was it ‘ascertainable’.
Saying
to Mr Brown that they should reach agreement on the amount of the
commission, was a mere invitation to fix the amount amicably,
and not
a condition to the payment thereof.
[31]
If no rate of commission is agreed at the outset, then the principle
is that the estate agent is entitled to a reasonable remuneration,
which is the prevailing, or standard or customary rate of
commission. (See
LAWSA
Vol 9 2
nd
Ed para
580.) That principle finds application in this case. In
Muller
, at 323E-H, Comrie J said:
‘
In this instance no rate of
commission was agreed at the outset, and circumstances pre-empted a
negotiated commission at a later
stage. The principle is then that
the estate agent is entitled to a reasonable remuneration in the
event of a sale, which is usually
taken as the prevailing or standard
or 'customary' rate of commission, being in this case 7% plus tax. De
Villiers and Macintosh
The Law of Agency in South Africa 3rd ed at
362, 365 - 6. It is possible that had events followed a different
course, Mrs Swart
may have agreed to accept a lower rate, but that is
not what happened in fact. Mr Maree argued that the plaintiff should
receive
the commission which Mrs Swart would probably have agreed to
accept, which counsel contended was 6% plus tax. It is not correct,
in my view, to approach the plaintiff's claim as though it were a
claim for damages. It was a claim for a reasonable remuneration.
In
the circumstances I have no fault to find with the magistrate's
decision to award the institutionally approved rate of commission,
being a rate which is regularly charged by estate agents, albeit not
without exception.’
[32]
D&A claims commission at a rate of 3% on the purchase price of
R40 million plus VAT. That, state Ms Dorfman and Mr
Flax, is a
reasonable remuneration, and is the standard or prevailing rate of
commission. D&A’s usual rate for
a property of this
price ‘is somewhere between 3 to 4%. They are both, as I
have mentioned, experienced and decorated
estate agents. They
state that commissions earned by estate agents in Hyde Park and
Sandhurst vary from 3 to 6%. They,
in this instance, claim ‘the
minimum [they] would normally charge in regard to a property of this
nature’. D&A
agreed to a commission of R1,5 million
on the sale price of R41,5 million when they previously, in 2013,
found a purchaser for
the property. The chairman of Seeff, one
of this country’s most established real estate companies, Mr
Samuel Seeff,
states that Seeff abides by the 7.5% standard industry
commission payable by sellers. The owner and principal agent of
Cape
Coastal Homes, Mr Benhard Wiese, states that normally sellers
can expect to pay between 5 and 7.5% of the selling price plus VAT
on
commission.
[33]
Kimberley House relies on the expert opinions of Mr Rynners and of Mr
Jochem Pieter Coetsee. Mr Rynners is active in
the real estate
market and Mr Coetsee is also an experienced estate agent and
conducts commercial enterprises that speculate, develop
and invest in
real estate nationwide. Their opinions are that D&A is only
entitled to an ‘introductory fee’
of R200 000, which is
commensurate with the actual services rendered, as opposed to the
usual estate agent’s commission.
Mr Coetsee is of the
opinion that D&A was only involved in the passing of
information. D&A’s position, in his
opinion, is akin
to situations where a non-mandated estate agent merely introduced a
purchaser to the property and to the mandated
estate agent, after
which the mandated agent puts the deal into effect. In his
experience the usual percentages offered to
the non-mandated agent
ranges between 10 and 20% of the commission earned by the mandated
estate agent. Referral fees, in
his experience, also range
between 10 to 20%. A referral fee, according to Mr Coetsee, is
payable where an estate agent hands
over a client to another estate
agent to do the work.
[34]
The opinions of Mr Rynners and of Mr Coetsee, however, ignore the
principle that the legal results flowing from the arrangement
between
the seller or purchaser and the estate agent depend on the nature of
the particular mandate. In this instance D&A
was the
commission agent for the buyer, Kimberley House, and, as I have
mentioned, such a ‘commission agent is paid by results
and not
by good intentions or even hard work’ and, if no rate of
commission was agreed at the outset, the estate agent is
entitled to
a reasonable remuneration, which is the prevailing, or standard or
customary rate of commission.
[35]
In the result the following order is made:
(a) The first respondent
is to pay the sum of R1 200 000.00 plus VAT to the applicant and
interest thereon at the rate of 9% per
annum from 30 June 2015 until
date of payment.
(b) The first respondent
is to pay the applicant’s costs of suit, including those of two
counsel.
P.A.
MEYER
JUDGE
OF THE HIGH COURT
Date
of hearing: 17 May 2017
Date
of judgment: 10 October 2017
Counsel
for applicant: Adv DC Mpofu SC (assisted by Adv SS Cohen)
Instructed
by: Tanners & Associates, Sandown, Sandton
Counsel
for respondents: Adv A Sawma SC
Instructed
by: Bruno Simȃo Attorneys, Sunninghill
C/o
Albert Jacobs Inc, Johannesburg