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[2010] ZAGPPHC 564
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Suliman and Others v Estate Agency Affairs Board and Others (15155/2005) [2010] ZAGPPHC 564 (11 February 2010)
IN
THE HIGH COURT OF SOUTH AFRICA
(NORTH
GAUTENG HIGH COURT. PRETORIA)
DATE:11 FEBRUARY
2010
CASE
NO: 15155/2005
NOT
REPORTABLE
NOT
OF INTEREST TO OTHER JUDGES
In the matter
between:
FAZUL HUQ
SULIMAN
.....................................................................................................................................................................................................................
1ST
PLAINTIFF
BLIK
INVESTMENTS (PTY)
LTD
....................................................................................................................................................................................................
2ND
PLAINTIFF
PRO
ONE INVESTMENTS (PTY)
LTD
.............................................................................................................................................................................................
3RD
PLAINTIFF
PRO
SIX INVESTMENTS (PTY)
LTD
...............................................................................................................................................................................................
4TH
PLAINTIFF
And
ESTATE
AGENCY AFFAIRS
BOARD
..............................................................................................................................................................................................
1ST
DEFENDANT
JACOBUS
HENDRIKUS JANSE VAN
RENSBURGH
N.O.
….........................................................................................................................................................................................................................
2ND
DEFENDANT
JAMES
HENRY VAN RENSBURG N.O.
….......................................................................................................................................................................................
3RD
DEFENDANT
ENVER
MOHAMED MOTLALA N.O.
…...........................................................................................................................................................................................
4TH
DEFENDANT
KHATHAZILE
SIMON
MAHLANGU
.................................................................................................................................................................................................
5TH
DEFENDANT
BOE
BANK LIMITED now NEDBANK
LIMITED
.............................................................................................................................................................................
6TH
DEFENDANT
JUDGMENT
SERITI, J
Introduction
1. This matter came
to court by way of action.
The first plaintiff
is a businessman who was acting as an agent of the second, third and
fourth plaintiffs who are all companies
registered in terms of the
laws of the Republic of South Africa.
The first defendant
is the Estate Agent Board, a juristic person duly constituted and
established in terms of Estate Agency Affairs
Act 112 of 1976 as
amended. No mention will be made about the other defendants as they
are not relevant for the purpose of this
judgment.
Particulars of
Claim
2. The first
plaintiff was at all relevant times the duly authorised agent of the
second, third and fourth plaintiffs duly appointed
in 2001 to
purchase property on behalf of the other plaintiffs.
3. Sterling Auctions
(Pty) Ltd (in final liquidation) was, at all relevant times acting as
an estate agent as envisaged and pursuant
to the provisions of the
Estate Agency Affairs Act 112 of 1976. On or about 8 February 2002,
the first plaintiff acting as an agent
as mentioned above concluded
written agreements of sale of Erf 499 and the Valgas property with
the third defendant, the latter
being represented by Sterling
Properties and were purchased by private treaty.
4. The purchase
price of the Valgas and Erf 499 properties was paid to Sterling by
two cheques of R278 500.00 and R2 056 500.00
by the third plaintiff
on 13 February and 5 March 2002 respectively.
Sterling has failed
to pay the amounts of R2 056 500.00 and R278 500.00 to the third
defendant and despite demand, Sterling has
failed to repay the monies
to the third plaintiff.
5. Sterling stole
the money mentioned above and the plaintiffs became aware of the said
theft on or about 7 May 2002. Sterling received
the monies in trust
and failed to comply with the provisions of section 32(1) or 32(2) of
the Estate Agency Affairs Act.
6. Plaintiff lodged
their claims in the total amount of R2 335 000.00 with the first
defendant and the latter has failed to pay
the said amounts.
7. On or about 20
February 2002 and at a public auction at Middelburg conducted by
Sterling, duly instructed by the second defendant,
the first
plaintiff purchased the Latval, Valmit, erf 142 Middelburg and Parsi
properties. Pursuant to the sales written agreements
of sale were
signed by the first plaintiff and the second defendant duly
represented by Sterling.
8. On 20 February
2002, pursuant to the written agreements the first plaintiff paid
Sterling an amount of R587 250.00. The said
amount was made up as
follows: R262 500.00 as a deposit on erf 142 Middelburg, R9 750.00 as
deposit on the Parsi property and R315
000.00 as a deposit on the
Latval and Valmit properties. Sterling received the said monies in
trust and stole the deposits paid
in respect of erf 142 Middelburg
and the Parsi property and consequently the plaintiffs lost an amount
of R272 250.00.
9. The plaintiffs
demanded repayment of R262 500.00 from Sterling and on 3 May 2002
purported to repay to the plaintiffs an amount
of R2 262 500.00 by
cheque which cheque was dishonoured on 7 May 2002 after it was
presented for payment.
Special Plea
10. In its special
plea, the first defendant alleged that the plaintiffs have failed to
comply with the provisions of section 19(1)
of the Estate Agency
Affairs Act 112 of 1976 in that they commenced this action without
the permission of the first defendant and
have failed to exhaust all
relevant rights of action and other legal remedies available to them
in respect of the estate agent
in respect of whom the claim arose and
against all other persons allegedly liable in respect of their
alleged loss.
First Defendant’s
Plea
11.
The first defendant denied
inter
alia
that
Sterling Auctions was liquidated and that it acted as an estate agent
as envisaged in the relevant Act. It also denied the
existence of
written sales agreements as alleged in the particulars of claim and
that any payments were made by the plaintiffs
to Sterling.
12. The first
defendant also denied that the plaintiffs complied with the
provisions of section 19 of the Act and alleged that the
plaintiffs
failed to pursue other remedies against persons and/or entities
allegedly responsible for their loss.
Defendant’s
response to Plaintiffs Rule 21 Notices
13. In its reply the
first defendant stated that the plaintiffs have failed to institute
action against all parties that were allegedly
involved in the theft
of money. Plaintiffs failed to invoke the provisions of the company
law pertaining to members and/or directors
of Sterling and failed to
go against the estates of parties who were allegedly involved in the
theft of money.
14. First defendant
denied that Sterling was ever duly recognised as an estate agent and
that the first defendant did not at any
stage issue a fidelity fund
certificate to Sterling.
Plaintiff’s
reply to Defendant’s Rule 21 Notice
15. In reply to
first defendant’s notice in terms of rule 21 the plaintiffs
stated that after liquidation of Sterling they
were awarded a
liquidation dividend of R810 062.48. The provisions of section 424 of
the Companies Act were not invoked by the
plaintiffs.
Plaintiff’s
Evidence
16. The first
witness to be called by the plaintiffs was Mr F H Suliman, the first
plaintiff. He testified that at the relevant
times he was acting as
an agent of the other plaintiffs. He testified about how he bought
the different properties and that the
relevant amount of monies were
paid to Sterling Auctioneers. The latter failed to pay the said money
over to the purchasers and
the plaintiffs lost the amount of money
mentioned in the particulars of claim namely R2 335 000.00 and R2 262
500.00. Plaintiff
received an amount of R800 000.00 from the
liquidators of Sterling which amount must be deducted from the total
claims of the plaintiffs.
17. In May 2002 he
ascertained that Sterling Auctioneers were in financial trouble and
he was advised to go to Estate Agency Affairs
Board. He contacted the
latter for the first time on 22 July 2002. At the Board referred to
above, he saw Mr Solomon Makenna on
16 October 2002 and the latter
requested certain documents from him. He gave him a variety of
documents including interdict applications
instituted by the
plaintiffs. He gave Mr Makenna said documents 2-3 months after their
initial meeting.
18. When he saw Mr
Makenna he was accompanied by a director of the three plaintiffs and
Mr Makena knew that he was acting in a representative
capacity. On or
about 5 November 2002 he completed a claim form received from Mr
Makenna which was in an affidavit form and he
delivered same to the
Estate Agency Affairs Board together with a variety of documents
referred to in the previous paragraph.
19. After the
liquidation of Sterling they initiated an enquiry in terms of section
417 of the Companies Act and they paid for the
said enquiry and
consequently the plaintiffs were awarded secured dividend. Mr Van der
Walt’s estate, one of the director’s
of Sterling was
sequestrated and the plaintiffs received a dividend from the said
estate.
20. Under
cross-examination he testified that he first saw Mr Makenna in July
2002 and a few times thereafter although he cannot
recall the dates.
On 16 October 2002 he was advised by Mr Makenna how to lodge a claim.
He had no written authority to lodge the
claims on behalf of the
plaintiffs but at the meetings with Mr Makenna he was accompanied by
a director of all the three plaintiffs.
All the directors of the
plaintiffs were aware that the claim has been lodged but he is not
aware if the plaintiffs adopted a formal
resolution authorising the
lodging of the claim.
He further testified
that he laid criminal charges against Mr Van der Walt and caused the
sequestration of the estate of Mr Van
der Walt.
21.
Under re-examination he referred to a letter dated 30 January 2004 he
received from Mr Makenna, Chief Executive Officer of the
Estate
Agency Affairs Board. In the said letter it is stated
inter
alia
“
After
thorough debate for a consideration time the committee concluded that
the matter be postponed
sine
die
for
you to finalise the civil matter that is before the High Court in
Pretoria wherein you are praying for the properties to be
transferred
into your principals names.”
22. He also referred
to several correspondence he addressed to Mr Makenna wherein he was
giving him reports about criminal investigations,
section 417
enquiry, confirming his discussions with Mr Makenna of April 2003
when Mr Makenna informed him that a new claims committee
was to be
established. He also referred to a letter from Mr Makenna addressed
to him and dated 18 June 2003. In the said letter,
amongst others,
the following is stated:
“
We
at this stage report that the Board Members for the Estate Agency
Affairs Board has not as yet been appointed by the Trade and
Industry
Minister as far as we know and we are waiting on the said
announcement and it is only then that we can convene a claims
meeting
to consider any claims.”
23. Next witness to
testify was Mr Abdul Hamid Kallo a director of second, third and
fourth plaintiffs. He confirmed all the payments
made to Sterling and
that the plaintiffs lost money as a result of the actions of
Sterling. Mr Suliman was acting as an agent of
the other plaintiffs
and he was authorised to lodge a claim with Estate Agency Affairs
Board. Under cross-examination he testified
that as far as he can
recall, the authorisation of Mr Suliman to lodge the claim was not in
writing.
Plaintiffs closed
their case.
First Defendant’s
evidence
24. The first
defendant’s witness to testify was Mr Solomon Makenna. He
testified that he is an admitted attorney although
he is no longer
practising. From July 2000 up to September 2007 he was the Claims
Manager of Estate Agency Affairs Board and later
he was appointed
Litigation Manager.
25. He further
testified that if a person wants to lodge a claim against the
Fidelity Fund, the said claim must be lodged by way
of an affidavit.
After receipt of the claim, it is investigated by claim officers and
thereafter the claim is put before the claims
committee for a
decision. Claim must be lodged within three months after claimant
knew about the facts giving rise to the claim.
Claimant, prior to
instituting action against first defendant, must exhaust all legal
remedies against the alleged wrongdoers.
26.
On 16 October 2002 he met for the first time with Mr Sulliman and the
following day he sent the latter,
inter
alia,
copy
of affidavit which is used to lodge the claim. When he met Mr
Sulliman, the latter brought him a file containing various documents.
On 5 November 2002 they received a claim from Mr Sulliman.
27. In a letter
dated 25 and 26 November 2002 Mr Sulliman advised him about the
progress of the interdict, investigation of estates
of wrongdoers and
the criminal case. On 22 January 2003 he was advised about the
section 417 enquiry. Again on 13 May 2003 Mr Sulliman
addressed a
letter to him. In the said letter the following is stated:
“
During
our last tele conversation approximately 1 month ago you informed me
that a new claims committee was being put into place
at the E.A.A.B.
Kindly inform me
approximately when a decision will be made regarding the above.”
He further testified
that he did not respond to the letters as his view was that Mr
Sulliman did not comply with procedures of lodging
a claim.
28. On 18 June 2003
he wrote a letter to Mr Sulliman and advised him that the Board
Members of the Estate Agency Affairs Board have
not as yet been
appointed and as soon as they are appointed they will convene a
claims meeting to consider claims.
On 30 January 2004
he wrote a letter to Mr Sulliman advising that the committee has
postponed consideration of their claim pending
finalisation of a High
Court matter wherein plaintiffs are praying for an order authorising
transfer of the properties in question
into their names. He also
requested Mr Sulliman resolutions authorising him to act on behalf of
the plaintiffs. He did not receive
reply to the said letter and they
received summons in May 2005.
29. He further
testified that the plaintiffs’ claim was never determined by
the Board because he was unable to place the claim
before the Board
as necessary requirements were not complied with.
30. Under
cross-examination he testified that the plaintiffs’ claim was
submitted in 2005 and that the date of receipt as
appears on copy of
claim form submitted with them is incorrect. At no stage did he
inform Mr Sulliman in writing that their claim
does not comply with
the necessary requirements. On 28 January 2004 the plaintiffs’
claim was placed before the claims committee.
From the documents Mr
Sulliman gave him, he was aware that the latter is acting on behalf
of certain principals.
31. Prior to the
leading of any evidence counsel for the first defendant, Advocate
Sibeko SC advised the court that for the purpose
of this matter they
accept that Sterling was an estate agent as contemplated in section 1
(a)(i) of the Act.
Section
12 of the Estate Agency Affairs Act
supra
makes
provisions for the establishment of Estate Agents Fidelity Fund.
Section 18 thereof
provides that the fund shall reimburse persons who suffer pecuniary
loss as a result of theft committed by an
estate agent or by the
failure of an estate agent to invest money in a trust account and
deal with it in accordance with the Act.
Section 19 which
deals with claims against the fund states that:
“
(1)
The board may, at any time after the commission of any theft ... in
respect of which a claim relating to the fund arose, receive
such
claim and may, subject to the provisions of section 18, settle such
claim: Provided that no person shall without the permission
of the
board commence any action against the board, unless and until the
claimant has exhausted all relevant rights of action and
other legal
remedies available against the estate agent in respect of whom the
claim arose and against all other persons liable
in respect of the
loss suffered by such claimant.”
32. It is undisputed
that the plaintiffs paid certain amounts of money to Sterling
Auctions and the said amounts are set out in
the particulars of
claim. They were also mentioned during the testimony of the two
witnesses who testified on behalf of the plaintiffs.
It is also
undisputed that Sterling Auctions failed to place in trust the monies
in question nor utilise them for the intended
purpose. Sterling
Auctions was placed in provisional winding-up on 10 May 202 and in
final liquidation on 20 November 2002.
33. According to the
evidence Mr Sulliman instructed the liquidators of Sterling Auctions
(in liquidation) to pursue an enquiry
in terms of section 417 of the
Companies Act against Mr Henk van der Walt, the former director of
Sterling Auctions which enquiry
or bank statements of Sterling
Auctions indicated that Mr Henk van der Walt was stealing money from
Sterling Auctions. Again on
instructions of Mr Sulliman the personal
estate of Mr Henk van der Walt was sequestrated. Mr Sulliman further
testified that the
relevant claims were lodged with the estates and
that the matter was reported to the police.
34. In the heads of
arguments, the first defendant’s counsel submitted that the
plaintiffs have failed to comply with the
provisions of section 19 of
the Act in that they failed to exhaust all legal remedies available
to them, eg utilising the provisions
of section 424 of the Companies
Act and that the board has not given permission for the commencement
of this action. I do not agree
with this submissions. The evidence
suggests that the plaintiffs pursued all available legal remedies
including laying a criminal
charge. Provisions of section 424 of the
Companies Act could not have assisted the plaintiffs as the estate of
the director of
Sterling Auctions who stole the money was
sequestrated. There is no evidence which suggests that besides Mr Van
der Walt, there
were other directors who could be held liable for the
loss suffered by the plaintiffs. After exhausting all legal remedies,
there
was no need for the plaintiffs to obtain permission of the
Board prior to instituting this action.
35. The first
defendant’s counsel in his heads of argument submitted that the
first plaintiff lodged the claim in his person
capacity. This
submission cannot be correct. Mr Sulliman testified that he lodged
the claim as an agent of the other plaintiffs.
The correspondence
between Mr Makenna and Mr Sulliman, in my view, indicates that the
Board was aware that Mr Sulliman was acting
as an agent. The claim
form submitted by Mr Sulliman was accompanied by a file containing
the transactions from which it is clear
that Mr Sulliman was acting
as an agent. Lack of written authority to act as an agent is not
fatal to the plaintiffs’ claims.
A director of the plaintiffs
in his oral testimony confirmed that Mr Sulliman had authority to act
on behalf of the plaintiffs.
36. At the time the
plaintiffs issued summons, their claims were about to prescribe. The
plaintiffs’ counsel in my view correctly
so submitted that the
plaintiffs were forced to issue summons at the time they did, in
order to interrupt prescriptions. If the
first defendant had any
desire to settle the matter it could have done so after receiving
documents it alleges were outstanding.
After receipt of the summons
it must have become clear that Mr Sulliman was acting in a
representative capacity.
37. My view is that
the plaintiffs have succeeded to make out a case against the first
defendant.
In the heads of
argument the plaintiffs’ counsel mentioned the amounts of money
the plaintiffs will be entitled to if they
succeed in this matter.
The first defendant’s counsel did not suggest that they said
figures are incorrect. I am not going
to make any calculations and I
am going to rely on the figures contained in the heads of argument of
the plaintiffs’ counsel.
38. The court
therefore makes the following order:
38.1
Claim
A
The first defendant
is to pay plaintiffs an amount of R1 553 200.00 plus interest at the
rate of 15.5% per annum calculated from
6 May 2005 to date of
payment.
38.2
Claim
B
The first defendant
is to pay plaintiffs an amount of R1 452 437.52 plus interest at the
rate of 15.5% per annum calculated from
6 May 2005 to date of
payment.
38.3 The first
defendant is to pay the Plaintiffs’ costs on a party and party
scale.
W L SERITI
JUDGE OF THE
NORTH GAUTENG HIGH COURT
15155/2005/sg
Heard
on
:
2 December 2009
For
the Plaintiffs
:
Adv N A Casim SC
Instructed
by
:
Geyser & Associates, Pretoria
For
the Defendants
:
Adv L T Sibeko SC
Instructed
bv
:
Mphahlele Attorney, Pretoria
Date
of Judgment
: