IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE HIGH COURT, CAPE TOWN)
Appeal Case No: A220/2023
Court a quo Case No: 11824/2021
In the matter between:
PROPERTY KNIGHT (PTY) LTD Appellant
versus
VAN NIEKERK GROENEWOUD AND VAN ZYL First Respondent
ADDAE-TWENEBOACH BERNARD Second Respondent
BA REAL ESTATES (PTY) LTD Third Respondent
VIRTUAL REALTY GROUP (PTY) LTD Fourth Respondent
THE TRUSTEES FOR THE TIME BEING OF THE
VW TRUST
Fifth Respondent
Coram: Binns-Ward J et Adhikari AJ
Heard: 2 February 2024
Delivered: 7 February 2024
JUDGMENT DELIVERED ELECTRONICALLY ON 7 FEBRUARY 2024
2
Delivered: This judgment was handed down electronically by circulation to
the parties' legal representatives by email. The date for the hand -down is
deemed to be on 7 February 2024.
ADHIKARI AJ (BINNS-WARD J concurring):
[1] This is an appeal from a decision in interpleader proceedings in the
Magistrate’s Court.
[2] On or about 6 September 2021 the fifth respondent (‘the Trust’) and one
Mary Tshabalala (‘the purchaser’) concluded a written agreement of sale (‘the sale
agreement’) in terms of which the Trust sold certain immovable property 1 to the
purchaser for an amount of R1 500 000 (‘the sale price’). The sale agreement
provides, inter alia, for payment of commission calculated at 5% inclusive of VAT on
the purchase price (‘the commission’) to the fourth respondent (‘VR Group’).
[3] The appellant (‘Property Knight’) and VR Group are both companies that
conduct business as estate agent s. At the time of the conclusion of the sale
agreement Property Knight employed the second respondent (‘Bernard’) as an intern
estate agent. It appears from the sale agreement that Bernard, acting as agent on
behalf of the Trust , offered the property for sale to the purchaser . The first
respondent (‘VGV’) was instructed to attend to the transfer of the property.
[4] On 1 2 October 2021, Property Knight instituted urgent proceedings in the
Magistrates Court in which it sought to interdict VGV from paying the commission to
Bernard and VR Group, and an order directing VGV to pay the commission to it (that
is to Property Knight) on registration of transfer of the property (‘the urgent
application’). The urgent application was dismissed on 23 November 2021.
1 The property in question comprises a unit and a garage in a sectional title scheme known as
Ruskin Villas (‘the property’).
3
[5] On 30 November 2023, having received a copy of the order dismissing the
urgent application, VGV informed Property Knight’s attorney (‘Fotoh’) that it would
proceed to pay the commission over to VR Group’s attorneys.
[6] Fotoh on 1 December 2021 addressed correspondence to VGV in which he
stated that he was of the view that the order dismissing the urgent application did not
permit VGV to pay the commission over to VR Group’s attorneys . Fotoh further
stated in the correspondence to VGV that “the seller’s position is that Bernard must
provide a valid FCC under Virtual Realty [ie VR Group] at the time of the sale, failing
which [VGV] must pay the commission to the seller”.2
[7] On the same date , VR Group’s attorney (‘Moosa’) in response to Fotoh ’s
correspondence advised VGV that he was of the view that VGV was contractually
bound to pay the commission over to VR Group on registration of transfer , and that
in light of the dismissal of the urgent application, there was no longer a live dispute
between VR Group and Property Knight as regards the entitlement to payment of the
commission. Moosa further advised that unless the commission was paid into his
firm’s trust account by close of business that day (that is 1 December 2021) urgent
proceedings would be launched against VGV for failure to pay over the commission
to VR Group.
[8] On 14 December 2021, VGV in light of the apparent ly conflicting claims of
Property Knight and VR Group, issued an interpleader summons . Property Knight
and VR Group both delivered interpleader particulars of claim , in essence
contending that they were each entitled to payment of the commission.
2 VR Group in the appeal raises certain concerns about Foto h’s alleged representation of the Trust.
I return to this issue later in the judgment.
4
[9] In summary:
[9.1] VR Group contended that on a proper interpretation of the terms of the
sale agreement, it is entitled to payment of the commission because
the sale agreement identifies VR Group as the party to which the
commission is payable.
[9.2] Property Knight contended that it is entitled to payment of the
commission because Bernard (a) was the effective cause of the sale;
(b) was employed by Property Knight at the time that the sale was
concluded; and (c) held a fidelity fund certificate that identified him as
an intern estate agent operating under the supervision of
Property Knight.
[10] The Magistrate ultimately found that Property Knight had failed to make out a
case that it is entitled to payment of the commission in that Property Knight is not
referred to at all in the sale agreement , and that VR Group is entitled to payment of
the commission on the basis of the terms of the sale agreement. Consequently, the
Magistrate ordered that VGV pay the commission to VR Group. The Magistrate
further ordered that Property Knight pay VR Group’s costs on an attorney client
scale, and VGV’s costs on a party and party scale.
[11] Property Knight appeals the order that VGV pay the commission to VR Group.
There is no appeal against the costs orders made by the Magistrate.
5
PRELIMINARY ISSUES
[12] Before dealing with the merits of the appeal, I deal with two preliminary
issues, first, the nature and exten t of the proceedings in the Magistrates Court and
second, the various condonation applications delivered by the parties.
[13] After the delivery of the interpleader summons and the parties’ respective
interpleader particulars of claim , a ten-day trial ensued in the Magistrates Court,
during which e xtensive oral evidence was led , resulting in a n appeal record
comprising some twelve volumes . It appears that a portion of the record was not
transcribed and consequently , on the morning of the hearing of the appeal, the
parties by agreement delivered a further volume containing what is described as a
“statement of facts in respect of the evidence in chief of Matthew Knight”.
[14] This appeal turns on a discrete point of law. That is, whether on a proper
interpretation of the sale agreement, VG Group or Property Knight is entitled to
payment of the commission. There was no need for oral evidence to have been led
as none of the facts on which the issue before the Magistrate ought to have been
decided are in dispute. Mr Moosa for VR Group submitted at the hearing of the
appeal that he had raised precisely this issue at the commencement of the
proceedings before the Magistrate but th at Property Knight and Fotoh had persisted
that it was necessary to lead oral evidence on the issues which Property Knight
contended were in dispute. None of this, however, appears from the record. We
were informed by Mr Moosa that this is as a result of the fact that the first day of the
proceedings before the Magistrate had not been transcribed.
6
[15] Whatever the case may be, it is unfortunate that the Magistrate did not identify
the crisp issue for determination at the outset of the proceedings. Had this been
done, it would have obviated the need for the leading of extensive oral evidence, or
indeed any evidence at all.
[16] Both Property Knight and VR Group sought condonation for the late delivery
of their respective heads of argument . Further, Property Knight sought condonation
for the late delivery of the appeal record. None of the condonation applications were
opposed and no prejudice was alleged by either party resulting from the late delivery
of the record or of the heads of argument. The record and the heads of argument
were provided to the court in sufficient time to allow us to consider the record and the
heads of argument prior to the hearing of the appeal. Consequently, the late delivery
of the record and the heads of argument has not caused significant inconvenience to
the court. In light of these facts , condonation was granted for the late delivery of the
record of appeal and for the late delivery of the parties’ heads of argument.
THE MERITS OF THE APPEAL
[17] As I have mentioned, this appeal turns on the proper interpretation of the sale
agreement. The sale agreement, in relevant part, provides:
[17.1] The purchaser offered to purchase the property from the Trust (the
seller) for the purchase price of R1 150 000 on the terms set out in the
sale agreement (clause 1, read with clauses 2.1; 2.2 and 3).
[17.2] The sale agreement was subject to the suspensive condition that the
purchaser is granted a loan by a financial institution within 20 days of
acceptance of the offer (clause 4.1).
7
[17.3] Transfer of the property would be effected by VGV on
1 November 2021 or as soon as reasonably possible after the parties
had complied with the terms of the sale agreement (clause 5.1).
[17.4] The sale agreement would not be varied or cancelled unless such
variation or cancellation was reduced to writing and signed by all the
parties or their duty authorized representatives (clause 11.1).
[17.5] The sale a greement constitute s the whole agreement between the
parties and no other agreements, representations or warranties or
whatever nature have been made by the parties or “the Agent”3 save as
included in the sale agreement (clause 11.2).
[17.6] Commission, calculated at 5% inclusive of VAT, on the purchase price
was to be paid by the Trust to VR Group trading as BA Real Estates
(clause 12.1).
[17.7] Commission would be deemed to have been earned on acceptance of
the offer and fulfilment or waiver of any suspensive conditions
contained in the sale agreement (clause 12.1).
[17.8] Commission would be payable on registration of transfer and VGV was
irrevocably instructed by the parties not to pass transfer until it had
sufficient funds to secure the commission due to VR Group trading as
BA Real Estate (clause 12.2).
[17.9] The Trust irrevocably authorised and instructed VGV to make payment
of the commission to VR Group trading as BA Real Estate from the
3 The term “Agent” is not defined in the sale agreement.
8
deposit held by VGV upon fulfilment of the suspensive conditions , and
if the deposit was in sufficient therefore, from the proceeds of the sale
(clause 12.3).
[17.10] VGV was irrevocably instructed to make payment of the commission
directly to VR Group trading as BA Real Estate, when the commission
was due in terms of the sale agreement (clause 12.4).
[17.11] If the sale agreement was cancelled as a result of default on the part of
the purchaser or the seller:
[17.11.1] VR Group trading as BA Real Estate would be entitled to
payment of the “professional free”4 from the party at fault
or;
[17.11.2] By mutual agreement between the purchaser and the
seller, VR Group trading as BA Real Estate would be
entitled to payment of the professional fee from the seller
and purchaser jointly and severally the one paying the
other to be absolved on the basis that the party making
payment would be entitled , in the absence of any written
agreement to the contrary , to claim half of the amount so
paid by him from the other party (clause 12.5).
[17.12] If the sale agreement was cancelled prior to registration of transfer but
after the fulfilment of any applicable suspensive conditions, VR Group
4 The term “professional fee” is not defined in the sale agreement, but having regard to the context
in which the term appears, it is evident that the term refers to the commission payable in terms of
the sale agreement.
9
trading as BA Real Estate would become entitled to payment of the
commission immediately upon such cancellation and VGV was
instructed to effect payment accordingly (clause 12.6).
[17.13] The purchaser warranted that she was introduced to the property by
“the Agent” and that “the Agent” 5 was the effective cause of the sale.
[18] Property Knight’s case is that notwithstanding the terms of the sale
agreement, it is entitled to payment of the commission because Bernard, as the
effective cause of the sale, was employed by it and held a fidelity fund certificate that
identified him as an intern estate agent operating under the supervision of
Property Knight. There is, however, no legal basis for this contention.
[19] It is well settled that a n estate agent's contractual relationship with his or her
principal is like any other contractual relationship and is not subject to special rules
of law. 6 Whether the agent is entitled to the payment of commission will depend
upon what was agreed between the parties. Where such a claim is made, one has
to look at the particular contract and see whether, according to its terms, construed
in accordance with the ordinary principles of construction, the event has happened
on the occurrence of which the commission is expressed to be payable.7
[20] Consequently, in order to determine whether Property Knight is entitled to
payment of the commission that the Trust instructed VGV to pay from deposit held
by it in terms of the agreement of sale regard must be had to the terms of the
agreement, properly interpreted.
5 It is apparent from the context of the sale agreement that the term “Agent” although not defined,
refers to the estate agent, whose conduct is the immediate cause of the sale.
6 Nach Investments (Pty) Ltd v Knight Frank South Africa (Pty) Ltd [2001] 3 All SA 295 (A) at
paras [1] and [8].
7 Id. See also Midgley Estates Ld v Hand [1952] 2 QB 432 (CA) at 435.
10
[21] It is trite that the i nterpretation of written agreements is a unitary exercise
where the words of the document are considered in the light of all relevant and
admissible context.8 While one is at liberty to depart from the words used, if having
regard to admissible background and surrounding factors it is evident that the words
used would lead to a result contrary to the purpose and intention of the parties , a
court cannot make a contract for the parties.9
[22] Bearing these principles in mind, it is clear from the terms of the sale
agreement that the commission was to be paid to VR Group on registration of
transfer. The sale agreement is unambiguous in this regard. The sale agreement
does not contain a single provision that can reasonably be interpreted as entitling
any party other than VR Group to payment of the commission. Critically, there is no
reference at all to Property Knight in the sale agreement. Further, none of the
evidence establishes that it was the common intention of the parties to the sale
agreement, that Property Knight be entitled to payment of the commission. This is,
in any event, not Property Knight’s case.10 Further, it is common cause that all of the
contractual provisions for the payment of the commission have been fulfilled.
[23] Consequently, the sale agreement properly interpreted entitles VR Group to
payment of the commission and there is no basis in law for the commission to be
paid by VGV to Property Knight. For these reasons the findings of the Magistrate
cannot be faulted, and the appeal must fail.
8 Bothma-Batho Transport v S Bothma & Seun Transport 2014 (2) SA 494 SCA at para [12].
9 Natal Joint Municipal Pension Fund v Endumeni Municipality 2012 (4) SA 593 (SCA) at para [18].
10 Property Knight does not seek the rectification of the sale agreement, it does not contend that the
sale agreement expressly provides that it is entitled to payment of the commission, nor does it
contend that the sale agreement contains a tacit term to that effect.
11
[24] It may be that Property Knight might entitled to payment of commission by the
Trust in terms of any separate agreement that it might have had in respect of the
marketing and sale of the property. If there is such an agreement, Property Knight’s
remedy lies in enforcing its rights under that agreement. It was a stranger to the
contract in issue in the current case. There was no basis upon which it could
superimpose any claim in terms of a separate contract to which it might be party with
the Trust on the contract between the Trust and VR Group.
COSTS
[25] As to the issue of costs, there is no reason why costs ought not to follow the
result. It was submitted on behalf of VR Group that it would be appropriate for
Property Knight to pay the costs of the appeal on an attorney -client scale because
the appeal is without merit and can be characterised as “hopeless”.
[26] The ordinary rule is that the successful party is awarded costs as between
party and party. An award of attorney and client costs is not lightly granted and
requires an applicant to demonstrate the existence of special considerations arising
either from the circumstances which gave rise to the action, or from the conduct of
the losing party. However, where the court is satisfied that there is an absence of
bona fides in bringing or defending an action it will not hesitate to award attorney and
client costs.
[27] Although the appeal has not succeeded, there is no basis on which to find that
Property Knight lacked bona fides in bringing the appeal. Rather it appears to have
been badly advised. This is, however, not sufficient reason to warrant the granting of
a punitive costs order. (We might have been disposed to make a punitive costs
order on the basis of the oft cited approach articulated in In re Alluvial Creek Ltd
12
1929 CPD 532 had the appellant persisted with its meritless claim in the face of a
more clearly reasoned judgment by the court a quo, but, regrettably, the magistrate
did not dispose of the matter as plainly and firmly as it deserved to be.)
REFERENCE OF THE APPELLANT’S ATTORNEY TO THE LEGAL PRACTICE
COUNCIL
[28] Finally, VR Group further asks for the referral of Fotoh to the Legal Practice
Council (‘LPC’) on the basis that he misrepresented to the parties and to the court
below that he represented the Trust.
[29] It appears from the record that VR Group at some stage challenged Fotoh’s
authority to act for the Trust. 11 In response, Fotoh on 16 February 2022 delivered a
notice indicating that they no longer act for the Trust. Further on 7 December 2021
Fotoh sent an email to VGV stating that Fotoh would accept service of the
interpleader summons via email on behalf of the Trust and on behalf of Property
Knight. Ms Chantal Schreuder (‘Schreuder’), of KIS Construction which is a close
corporation owned by Mr Robert Wolf es (‘Wolfes’) of the Trust was copied into
Fotoh’s email. Wolfes gave evidence that he left Schreuder, his secretary, to attend
to all the details of the sale transaction in respect of the property . Consequently,
despite Wolfes’ testimony that he did not know Fotoh or instruct him to act on the
part of the Trust it appears from the record that Schreuder was aware of the fact that
Fotoh was purporting to act on behalf of the Trust. There is no indication on the
record that she raised a concern about Fotoh’s contentions in this regard.
Consequently, it appears that Fotoh may have been mistaken about whether he in
fact was instructed by the Trust and once his authority was challenged , he withdrew
11 An undated copy of a notice in terms of Rule 52(2) forms part of the appeal record.
13
as attorney of record for the Trust . Fotoh’s conduct in this regard does not merit a
referral to the LPC.
REFERENCE TO THE PROPERTY PRACTITIONERS’ REGULATORY
AUTHORITY
[30] As mentioned, the evidence adduced in the court a quo suggested that the
purchaser was introduced to the property by B ernard. It appears that he was an
‘intern’ as defined in s 2 of the Standard of Training of Estate Agents Regulations,
2008.12 In terms of s 26 of the (since repealed) Estate Agents Act 112 of 1976, as
amended, no person was permitted perform any act as an estate agent unless a
valid fidelity fund certificate has been issued to him. It would appear that the Estate
Agents Board had issued an intern’s certificate in respect of Bernard in his capacity
as intern in the employ of Property Knight.
[31] It appears to us , prima facie, that the validity of a fidelity certificate issued to
an intern is limi ted to the intern’s activities under the auspices of the firm of estate
agents identified on the certificate as the intern’s principal. There was no evidence
that Bernard held a fidelity certificate as an employee or intern of VR Group that
stipulated for commission in the current case.
[32] Furthermore, t he regulations imposed strict constraints on the ability of an
intern to act as an estate agent , save under the direct supervision ‘of a principal
estate agent or of an estate agent who has continuously held a valid fidelity fund
certificate issued by the Board for a period of not less than 3 years’.13 The regulatory
12 Published in RGN R633 in GG 31125 of 4 June 2008.
13 Reg. 2(4) and (5).
14
provisions in question are directed at the protection of the public and it is therefore in
the public interest that they be properly policed and enforced.
[33] The evidence left us in doubt as to whether Bernard and/or VR Group acted in
compliance with these requirements and restraints in the trans action in issue in the
current case. Ma tters that in law affected the entitlement of either of them to claim
commission. We make no findings on these questions as they were not explored in
the court a quo. It does, however, seem to us , on the evidence that was adduced in
the proceedings before the magistrate , that they are questions deserving of
investigation by the Property Practitioners’ Regulatory Authority, 14 which is the
statutory successor to the erstwhile Estate Agents Affairs Board. We shall therefore
direct that the Registrar forward a copy of this judgment to the Chief Executive
Officer of the Authority for the attention of the Authority’s Board.
In the result I make the following order:
1. The appeal is dismissed.
2. The appellant shall pay the fourth respondent’s costs on appeal as between
party and party.
3. The Registrar is directed to forward a copy of this judgment to the Chief
Executive Officer of the Property Practitioners Regulatory Authority with
reference to the issues identified in para 30-33.
14 Established in terms of s 5 of the Property Practitioners Act 22 of 2019, which came into operation
with effect from 1 February 2022.
15
___________________
M. ADHIKARI
Acting Judge of the High
Court
___________________
A.G. BINNS-WARD
Judge of the High Court
16
APPEARANCES:
Applicant’s Attorney: Mr F Moosa
Instructed by: Moosa and Pearson
Respondents’ Counsel: Adv A Titus
Instructed by: Fotoh and Associates