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[2023] ZAKZPHC 95
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Naidoo and Another v Wakefields Real Estate (Pty) Limited (AT638/17) [2023] ZAKZPHC 95 (22 September 2023)
FLYNOTES:
CONTRACT –
Property
sale –
Estate
agent commission
–
Amendment reducing commission made after offer to purchase –
Buyers contending that purchase was subject
to daughter’s
approval – No prejudice in reduced commission –
Purchasers bound under caveat subscriptor
doctrine – No
evidence to support a defence based on iustus error –
Magistrates court finding for estate agent
and granting judgment
for payment of commission – Appeal dismissed.
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Appeal
Case No: AR638/17
Court
a quo
Case No: 1580/2015
In
the matter between:
PATGONAN
NAIDOO
FIRST APPELLANT
THAVANTHREE
NAIDOO
SECOND APPELLANT
and
WAKEFIELDS
REAL ESTATE (PTY) LIMITED
RESPONDENT
ORDER
On
appeal from the Chatsworth Magistrates Court, Magistrate DST Khuzwayo
presiding, the following order is issued:
1.
The appeal is dismissed with costs.
JUDGMENT
Henriques
J (Mlaba J concurring)
Introduction
[1]
The dispute which gave rise to the appeal arose out of a claim for
estate agent's
commission allegedly due to the respondent in their
capacity as estate agents in the sum of R40 000. The respondent
alleged that
on 25 March 2015, it had through its estate agent, Ms
Jennifer Kim Badsey (Badsey) concluded a valid written purchase and
sale
agreement for the sale of an immovable property being Section 3,
lshkon Mews, 14 School Circle for the purchase price of R550 000.
The
respondent indicated that the appellants had failed in their
obligation to perfect the agreement and refused to proceed with
the
sale of the property. It was common cause that the respondent
represented by Ms Badsey was the effective cause of the sale.
[2]
The appellants' defence to the respondent's claim for estate agent's
commission was
that it was never their intention to enter into a
purchase and sale agreement with the respondent as they were
purchasing the property
for their daughter; the purchase of the
property was subject to her approval as well as an assessment of the
cost of renovations.
No valid agreement had been concluded between
the appellants and the respondent and in the event of the court
finding a valid agreement
to have been concluded, such agreement was
lawfully terminated.
[3]
In addition the appellants denied liability for payment of commission
as clause 17
of the agreement had never been brought to their
attention. Clause 17 of the purchase and sale agreement provided for
the respondent
to seek payment of estate agent's commission from the
appellants in circumstances where the purchasers failed to carry out
their
obligations in terms of the agreement. It provided as follows:
"…..However
should the PURCHASER fail to carry out his obligations herein,
Wakefields shall have the right to, but not
be obliged to, recover
their commission plus VAT from the PURCHASER….."
[4]
In the court
a quo
the respondent led the evidence of two
witnesses being the estate agent in its employ, Ms Badsey, and a
trainee estate agent Adele
Kleinschmidt (Kleinschmidt). After the
application for absolution from the instance was dismissed, the first
appellant testified.
The second appellant did not testify.
[5]
After considering the evidence and submissions of the legal
representatives, the court
a quo
rejected the defences
advanced by the appellants and granted judgment in favour of the
respondent jointly and severally against
the first and second
appellants, the one paying the other to be absolved for payment of
the commission in the sum of R40 000 and
interest thereon at the rate
of 9 percent from date of summons to date of full and final
settlement, together with costs.
Facts
[6]
A brief exposition of the facts presented in the court
a quo
warrants mentioning prior to this court dealing with the issues on
appeal and whether or not the court
a quo
was correct in its
findings and judgment. It is common cause that the respondent bore
the onus in the court
a quo
to prove its entitlement to
commission and that the appellants bore the onus in relation to the
defences raised.
[7]
Jennifer Kim Badsey (Badsey), an estate agent employed by the
respondent testified
that she had a mandate from the sellers David
and Linda Reuben to sell their immovable property situated at lshkon
Mews described
as 'a renovators dream'. She had run an advert in
Property Junction and the appellants responded to the advert and made
an appointment
to view the property on 25 March 2015. She confirmed
that the property needed repairs in that windows and aluminium frames
needed
to be replaced, there was damp on the walls and the cupboards
needed to be attended to.
[8]
She was contacted by the first appellant telephonically and they
arranged to meet
her at the unit. She testified that on their arrival
outside the premises, she had mentioned to the first appellant that
the property
needed work. All she had was a remote to the property
and did not have the keys as the aluminium door was not locked. The
first
appellant was accompanied by the second appellant and their
grandchild and they walked through the property and also around the
complex. The intern agent Ms Kleinschmidt was present at the time.
[9]
They then met at their respective cars outside the premises and had a
conversation.
The first appellant asked her whether he could make an
offer on the property and what price the sellers would accept. She
had mentioned
to him that the price on offer was R570 000 but he
could make whatever offer he wanted and she would convey the offer to
the sellers
and try and negotiate a sale. At that stage she offered
to email the first appellant the purchase and sale agreement so he
could
read it at home.
[10]
She had in mind the first appellant reading through the document and
contacting her once he was
ready to make an offer. He then questioned
her as to exactly where her offices were and indicated that he would
follow her to her
offices to complete the purchase and sale
agreement. On their arrival at the offices, she had requested the
intern to prepare a
cost calculator and she then retrieved a blank
purchase and sale agreement. She and the first and second appellants
together with
the intern Ms Kleinschmidt sat around the table in the
boardroom and went through the agreement and she explained the
procedure
to them.
[11]
The offer to purchase was completed in the boardroom with the first
and second appellants. After
the offer to purchase had been signed by
the first and second appellants, she then contacted the Reubens and
advised them that
she had an offer which was less than their asking
price. In order to get the sale, she agreed to reduce her commission
which she
then reduced to the sum of R40 000 inclusive of VAT and
this was an annotation made at clause 17 of the agreement.
[12]
The amendment to the commission was made after the first and second
appellants had signed the
offer to purchase. After the offer to
purchase had been signed, no other discussions took place between the
first and second appellants
save that the first appellant indicated
he may want to come back and look at the premises with a contractor
in order that the contractor
prepare a quote for repairs.
[13]
After the appellants left, she had a telephonic discussion with Mr
Reuben who was overseas who
informed her that she could accept the
offer and requested that she contact his wife as she had a power of
attorney to sign on
his behalf. Mrs Reuben came into their offices
after she had spoken to Mr Reuben and emailed the offer to purchase
to him and he
had given the 'go-ahead'. Mrs Reuben came in to the
offices to sign the acceptance of the offer to purchase in the
boardroom after
lunch on the same day, and at the time she had the
power of attorney. She took the remote for the property and left.
[14]
After the agreement had been signed by Mrs Reuben, Ms Badsey
telephoned the first appellant to
advise him that the offer to
purchase had been accepted and she would email it to him. The first
appellant said to her that he
needed to get access to the property
again as either on the Thursday or the Friday he wanted to bring his
daughter to have a look
at the property which had been purchased. She
informed him that she would contact Mrs Reuben and ask for the remote
to be returned.
Mrs Reuben then returned the remote on the same day a
short while after her conversation with the first appellant.
[15]
She did not hear anything further from the first appellant on that
day, however on the following
morning of 26 March 2015 there was an
email from the first appellant indicating that he no longer wanted to
proceed with the sale.
She had sent him an email on 25 March 2015 at
3h15pm advising him of the acceptance of the offer to purchase and
attached to the
email the signed offer. The email requested him to
arrange to deposit the funds and informed him that he could collect
the remote
after making such arrangements with him.
[16]
The email received from the first appellant at 06h44am read as
follows:
'Hi
Kim.
I
did some prices on revamping the place and the total amount will be
too much and does not make the purchase feasible for me. I
do like
the place but the total price after renovations is too much for me to
recover.
Therefore
I hereby decline my offer to purchase and thanks for your time.
I
tried calling your cell yesterday and you were not available.
Regards
Pat
Naidoo.'
[17]
Ms Badsey testified that on receipt of the email from the first
appellant she responded at 09h09am
on the same morning as follows:
'Hi
Pat
Thank
you for the mail below, I need to get legal advice as I am not aware
if you can withdraw an offer after both have signed.
Please let me
revert back to you after speaking to the attorney.
KIM'.
[18]
She confirmed that after speaking to the seller and the attorney she
received advice that the
seller wanted to proceed with the sale and
she received confirmation from the attorney who informed her that a
binding agreement
had been concluded and the sale had to proceed. She
subsequently informed the first appellant of this via email on 26
March 2015
at 10h59am. The response from the first appellant was to
ask her why she was forcing him to proceed with a sale for a property
that he did not want and could not afford.
[19]
On 27 March 2015 an email was sent to the first appellant which
contained a detailed response,
including the allegations by the first
appellant that the offer was subject to the approval of his daughter.
Ms Badsey countered
this and indicated that had this in fact been
discussed between the parties, it would have been included as a
special condition
in the purchase and sale agreement. After she had
advised the first appellant of the acceptance of the sale by the
sellers, she
confirmed that the only further discussion which took
place between them related to the request for the remote to show his
daughter
the property. In addition, she placed on record that she had
offered to email the purchase and sale agreement to him and his wife
to consider before signing it. However, it was the first appellant
who insisted that he follow her back to her offices to sign
the
offer.
[20]
She confirmed that after the exchange of correspondence between the
first and second appellants
and their legal representatives on 30
March, the appellants were placed in breach and asked to make payment
of the purchase price.
It was only in default of same that the action
was instituted for payment of the commission despite
the
fact that the sale did not proceed.
[21]
During cross-examination she confirmed that the sellers elected not
to proceed with the sale
and that the property had subsequently been
sold, although she had no knowledge of who had sold it. She confirmed
that she did
not receive a telephone call from the first appellant on
the afternoon of 25 of March nor did she receive a voicemail message
in
which she was informed that the first appellant's daughter was not
interested in acquiring the property and therefore cancelled
the
sale.
[22]
During cross-examination she pertinently disavowed any suggestion
that the appellants informed
her that the sale was contingent on
their daughter's approval as they were purchasing the property for
her. She stated that the
purchase price offered was the sum of R550
000. She also indicated that subsequent to their email exchange she
did not have any
telephonic contact with either of the appellants.
She specifically indicated that in relation to the purchase price she
would not
have had any discussions with the first appellant regarding
what the seller would have accepted or not but would have told him to
put the offer in writing and she would transmit this to the sellers
for them to make a decision on price as one of the sellers
was
overseas.
[23]
She denied that she insisted that the appellants place their
signatures on the offer to purchase.
What she communicated to them
was if they wanted to put in an offer, they should come to the
offices and the paperwork would be
completed and submitted. That is
the extent of their interaction in relation to the purchase price.
She was adamant that, firstly,
she would have included a special
condition that the sale was subject to approval from their daughter
had any family ever been
mentioned and, secondly, that she would have
asked them to send an offer to the seller and would not have
completed any documentation
awaiting an indication from the seller if
he would have accepted R550 000 as the purchase price. She confirmed
that the only time
the appellants' daughter was mentioned was when
the first appellant asked for the remote to show her the property.
There was no
mention that the sale was contingent on her approval.
[24]
Adele Kleinschmidt confirmed that she accompanied Ms Badsey on the
day on which the agreement
was concluded. They had a remote for the
gate and the property itself did not have any keys and they met the
two appellants and
their grandchild. At the time after introducing
themselves they explained to the appellants that the property needed
a lot of work
and they did not have keys to access the property. She
confirmed that Ms Badsey showed the appellants inside and outside of
the
property as the inside was empty.
[25]
The appellants also proceeded outside and looked around the common
areas. When they were finished
they had a discussion on the road
where their vehicles were parked. The first appellant informed Ms
Badsey that he would like to
put in an offer and wanted to know what
offer the sellers would accept. Ms Badsey responded and told him t at
hecould make an offer
for whatever price he wanted to but it was up
to the purchaser to decide whether or not such offer was acceptable.
[26]
Ms Badsey then offered to email the purchase and sale agreement to
the first appellant so he
could have a look at it and come back the
following day. The first appellant insisted that he meet them at
their offices to sign
the offer to purchase. She was not present for
the entire conversation that took place between Ms Badsey and the
appellants. She
was pres_ent for a portion of the discussion
specifically when the first three pages of the agreement were signed.
[27]
During cross-examination she confirmed that a discussion did take
place between Ms Badsey and
the first appellant regarding the cost of
renovations and the only cost that was discussed was that of the
aluminium windows. She
could not recall the exact words that were
used but confirmed that the first appellant may have enquired about
the costs of the
entire renovation but she was aware that at the time
the only quotation that they had was for the windows in the sum of
R25 000.
She was adamant that the discussion of the amount of R25 000
for renovations was confined to the aluminium windows.
[28]
She confirmed that at no stage was there any discussion regarding the
appellants purchasing the
property for their daughter and the only
discussion about their daughter was when she asked who the little
girl accompanying the
appellants was and it was mentioned that it was
their daughter's child. She did confirm that a discussion took place
between Ms
Badsey and the first appellant concerning the purchase
price of R550 000. The first appellant asked Ms Badsey what she
thought
the owner would accept as a purchase price.
[29]
She testified that Ms Badsey informed the first appellant to put in
the offer and she could take
it to the seller who would then make a
decision and that it was up to the seller to decide whether or not to
accept the offer.
It was not Ms Badsey's suggestion that the offer be
put in writing, Ms Badsey indicated that she would email them the
contract
and they could look it over and decide whether or not they
wanted to sign a formal offer of purchase and sale. She confirmed
that
it would have been made specifically clear to them that once
there is an offer of purchase and sale signed it becomes binding. She
in addition disputed the appellants' version that Ms Badsey insisted
that a written offer be made.
[30]
That then was the evidence for the respondent. After the application
for absolution from the
instance was refused, the first appellant
testified. I may add that his wife was not called to testify to
corroborate his version.
The first appellant testified that he
responded to an advert placed by Ms Badsey for the property which was
advertised as a renovator's
dream. After making an appointment with
Ms Badsey to meet at the property they attended at the property.
[31]
Ms Badsey was accompanied by Ms Kleinschmidt. He informed her that he
was looking for a house
for his daughter and after viewing the
property, he observed that renovations would have to be conducted on
the premises. Ms Badsey
informed him at the time that the seller had
a written quotation for renovations of R25 000. After viewing the
property, he informed
Ms Badsey that he was interested in purchasing
the property and enquired from her what the best offer would be to
make to the seller.
Ms Badsey indicated that she thought the best
price would be R550 000. He then requested Ms Badsey to contact the
seller telephonically
to make enquiries as to whether or not the
seller would accept the offer of R550 000. Ms Badsey's response was
that she could not
make a verbal offer but would have to make an
offer in writing. He responded and indicated that he would make an
offer in writing
as long as the offer stipulated it was subject to a
purchase price of R550 000 and his daughter agreeing to purchase the
property.
[32]
After they had viewed the property, they then made their way to Ms
Badsey's offices where the
offer to purchase and sale was prepared by
Ms Badsey. He and his wife signed the agreement. He indicated that
despite Ms Badsey's
evidence to the contrary, she did not canvas all
the clauses in the agreement with him. He specifically confirmed that
clause 17
was not specifically canvassed with him nor did Ms Badsey
have any conversation with them relating to payment of commission.
After
the agreement had been signed and they left the offices, Ms
Badsey informed him that she would notify him if the seller agreed to
the purchase price of R550 000 and he informed her that he would then
bring his daughter in. After leaving the premises Ms Badsey
telephoned him and advised him that the seller had accepted the
offer. He responded to Ms Badsey to say that he would send his
daughter in after discussions regarding the property.
[33]
After their arrival at home, he discussed the property with his
daughter and informed her of
the renovations that needed to be done.
His daughter indicated that she did not want the property. After the
conversation with
his daughter he tried telephoning Ms Badsey on her
phone to inform her that his daughter did not approve of the
property. He was
unable to contact Ms Badsey but did not leave a
message and thereafter communicated this to Ms Badsey via email.
[34]
He received the response from Ms Badsey the following day and there
were several email exchanges
between himself and Ms Badsey as
testified to by Ms Badsey and canvassed during the respondent's
evidence.
[35]
The first appellant was adamant that he informed Ms Badsey that he
was purchasing the property
for his daughter and that it was subject
to her approval. He disputed his liability for payment of the
commission as he indicated
that Ms Badsey was the one who insisted on
a written offer. He confirmed that Ms Badsey did not inform him that
if his daughter
did not approve of the property he would be bound by
the purchase and sale agreement. He also indicated that the
commission clause
was never canvassed with him.
[36]
During cross-examination the first appellant confirmed that he signed
the agreement and page
2. He acknowledged that having regard to his
inspection of the premises there were several repairs needed, namely
in respect of
the cupboards, damp, bathroom, doors and windows. He
disputed the suggestion that Ms Badsey informed him that the quote of
R25
000 related only to aluminium doors and windows. He was adamant
that she indicated the R25 000 was for the entire cost of the
repairs.
He indicated that he had no idea of what the costs would be.
[37]
He indicated that he did not ask Ms Badsey to make the
agreement subject to approval of
his daughter as he was not an
attorney and did not know he could do this. He disputed that he did
not inform Ms Badsey that the
purchase of the property was subject to
his daughter's approval. The first appellant also conceded that there
was no mention of
his daughter in the emails exchanged with Ms
Badsey. He was adamant that Ms Badsey was aware he would be taking
his daughter to
view the property at a later stage.
The
issues on appeal
[38]
The issues as identified on appeal in both the written submissions
and oral argument are the
following:
(a)
Did a failure by one of the sellers, Mrs Reuben, to sign the purchase
and sale agreement twice (on her behalf as well as on her husband's
behalf) invalidate the agreement;
(b)
Did the alteration by Ms Badsey and Mrs Reuben of the amount of
commission
payable in terms of the written agreement impact on the
respondent's right to claim commission from the appellants;
(c)
Did the respondent's failure to communicate to the appellants
expressly
its acceptance of a commission payable in terms of the
written agreement preclude the respondent from claiming such estate
agent's
commission;
(d)
Did the respondent's agent, Ms Badsey, induce the appellants to sign
the
purchase and sale agreement through misrepresentation;
(e)
Was the appellants' mistake that led them to signing the purchase and
sale agreement
iustus
. The appellants contend that their
mistake arose from the respondent's agent inducing them into signing
the written agreement of
purchase and sale. This issue relates to the
payment of the commission.
Analysis
[39]
Dealing with the first issue. Mr
Pitman
who appeared for the
appellants submitted that the purchase and sale agreement called for
the signature of both the sellers being
Mr and Mrs Reuben. He
submitted that
s 2
of the
Alienation of Land Act 68 of 1981
provides
for the formalities in respect of the alienation of immovable
property and non-compliance with the formalities of
s 2
render an
agreement null and void. He submitted that there were two owners of
the immovable property being Mr and Mrs Reuben
and having
regard to the purchase and sale agreement only Mrs Reuben signed the
agreement.
[40]
The agreement made provision for two signatures and it is common
cause that there was only one
signature on the document. It was
submitted that it is not relevant that Mrs Reuben had a power of
attorney to transact on behalf
of her husband. Mrs Reuben was never
called to testify as to whether or not she was signing in her
capacity as seller and also
in her capacity by virtue of a power of
attorney acting on behalf of her husband. If she was purporting to
sign the purchase and
sale agreement by virtue of the power of
attorney she would have had to affix her signature in a
'representative capacity'.
[41]
In addition, he submitted that Ms Badsey testified that at the time
of signature, Mrs Reuben
had the power of attorney with her. She did
not forward the power of attorney to the appellants after the
agreement had been signed
by Mrs Reuben and consequently the
inference must be drawn that Ms Badsey was of the view that only the
signature of Mrs Reuben
on the agreement was sufficient.
[42]
The appellants submit that in these circumstances the agreement was
null and void as it is not
evident that Mrs Reuben signed the
agreement on behalf of both herself and her husband
ex facie
the document and consequently the agreement falls foul of the
provisions of
s 2
of the
Alienation of Land Act. In
addition, the
appellants submit that the court
a quo
committed a
misdirection as it did not provide any reasons why it rejected this
submission by the appellants.
[43]
Section 2(1)
of the
Alienation of Land Act provides
that:
'No
alienation of land . . . shall . . . be of any force or effect unless
it is contained in a deed of alienation signed by the
parties thereto
or by their agents acting on their written authority.'
[44]
It is correct that Mr and Mrs Reuben were the joint owners of the
property and were married in
community of property to each other.
Section 2
of the
Alienation of Land Act as
quoted above requires any
deed of alienation to be signed by the parties or 'by their agents on
their written authority'. It is
clear from the agreement that Mrs
Reuben signed the agreement for both herself and her husband and as a
result there is only one
signature. The evidence of Ms Badsey was
clear and communicated to the appellants that one of the sellers was
overseas but that
his wife was not. In addition, Mrs Reuben had a
power of attorney authorising her to act on behalf of her husband.
[45]
Secondly,
s 14
of the
Matrimonial Property Act 88 of 1984
provides
that in a marriage in community of property a wife has equal marital
powers to that of her husband especially when it
comes to the
disposal of assets of the joint estate. A spouse is permitted,
provided that the spouse has the written consent of
the other spouse,
to alienate any immovable property that forms part of the joint
estate. This is self-evident from the provisions
of
s 15(1)
and
s
15(2)(a)
of the
Matrimonial Property Act. I
consequently agree with
the submissions of Mr
Hoar
who appeared for the respondent
that all that was required was for Mrs Reuben to sign the purchase
and sale agreement and for her
to have had the written consent of her
husband to do so. It is evident that she did so as she had written
consent by virtue of
the General Power of Attorney given to her by Mr
Reuben at the time. Such power of attorney was presented to Badsey at
the time
she signed the purchase and sale agreement and Badsey
testified that she made a copy thereof at the time. Consequently, the
signature
of Mrs Reuben alone was sufficient to bind the joint estate
to the purchase and sale agreement.
[46]
The submission by the appellants that the court a quo did not
consider the argument in relation
to the authority to sign and the
compliance with
s 2
of the
Alienation of Land Act is
dealt with in
the judgment. It is evident that the court a quo considered the
submissions both at the time the application for
absolution ·from
the instance was made and also when all the evidence had been
presented. The court had regard to
s 2
of the
Alienation of Land Act
and
also the evidence placed on record in relation to the power of
attorney and the fact that it was not challenged. Consequently, the
first ground of appeal is without merit.
[47]
The second issue which arises on appeal for determination relates to
the alteration of the commission
clause in the agreement. It is
common cause that at the time of signature of the agreement by the
appellants clause 17 of the agreement
made provision for estate
agent's commission to be at the rate of 7.5 percent calculated on the
purchase price together with VAT
thereon. The appellants submit that
clause 17 was never explained to them more specifically that they
were unaware that they might
have to pay commission if they were in
breach of the purchase and sale agreement.
[48]
They also submit that it would be unjust and inequitable to hold them
liable to the respondent
for payment of the commission in
circumstances where, firstly the clause was never explained to them
and secondly, the amount of
commission payable was amended without
their consent. They submit that the appellants were never alerted to
the possibility that
they may have to pay commission in circumstances
where they were in breach of the agreement and it was incumbent on Ms
Badsey to
explain this specifically if they became liable as a result
of non-compliance with the agreement but more specifically in
circumstances
where clause 17 was altered without their knowledge.
[49]
It is common cause that after the appellants signed the offer to
purchase and sale it was presented
to Mr and Mrs Reuben for
acceptance. According to Ms Badsey in order to secure the sale she
agreed to compromise on the commission
payable and agreed with the
seller that the commission payable to the respondent in terms of
clause 17 would be a lesser amount
of R40 000 inclusive of VAT. She
indicated that as an agent she was entitled to do so without this
having to be confirmed by any
member of management provided it was
within the parameters of her authority.
[50]
She confirmed that this amount was within the parameters of her
authority and management did
not have to confirm this. She did so to
ensure that she got the sale. It is evident that the
caveat
subscriptor
rule provides that a person who signs a contract signifies their
assent to the contents of the document, and they are bound by
the
document even if it subsequently turns out that the terms are not to
their liking. In that event, they have no one to blame
but
themselves.
[1]
[51]
The evidence of both Ms Badsey and Ms Kleinschmidt was that the
appellants had ample opportunity
to read the agreement before
signing. In addition, Ms Badsey's evidence, as corroborated by Ms
Kleinschmidt whilst she was present
initially, is consistent that the
entire document was read out to the appellants before they signed. In
addition, both her and
Ms Kleinschmidt confirmed that she had offered
to email the agreement to the appellants to read through it and
consider same before
they signed and placed their signatures on it.
By signing the agreement, the appellants signified their assent to
the terms of
the document and agreed to be bound thereby. If, as the
appellants want the court to believe, they did not read the agreement
properly
before signing it, regrettably having regard to the rule of
caveat subscriptor
they only have themselves to blame.
[52]
Although the appellants rely on the code of conduct of estate agents
to avoid liability these
submissions are without merit. The evidence
of Ms Badsey was that she went through the contract point by point
with the appellants.
Consequently, she would have fulfilled both her
ethical obligations and complied with the code of conduct in this
regard. Even
if she had failed to comply with the code of conduct it
does not invalidate the agreement having regard to the rule of
caveat
subscriptor
. In any event the appellants were free to lodge
a complaint with the Estate Agency Affairs Board against Ms Badsey.
[53]
It is accepted that clause 17 amounts to what is often referred to as
a
stipulatio alteri
which is a benefit for a third party. Ms
Badsey testified that the commission was payable by the sellers to
the respondent. It
was amended subsequently which had the effect of
reducing the amount of commission payable by the sellers to the
respondent. In
addition, the appellants benefitted from such
reduction and consequently were not prejudiced thereby.
[54]
Mr
Pitman
submitted that there needed to be a specific
acceptance of such benefit by the respondent. This is not correct as
such acceptance
need not be express and can be inferred from conduct.
The acceptance likewise only had to be communicated to the sellers in
order
to bind the sellers to payment of the commission. Ms Badsey's
evidence once again is that she as an estate agent of the respondent
was entitled to negotiate the commission payable by the seller within
certain parameters. This she testified she did and confirmed
that she
accepted the commission on behalf of the respondent. Consequently,
there can be no dispute that through its agent, Ms
Badsey, the
respondent accepted the benefit of the commission conferred in terms
of
stipulatio alteri
.
[55]
The appellants submit that they were induced into entering into the
agreement and have raised
the defence of misrepresentation. They bore
the onus in proving that there was a misrepresentation which entitled
them to resile
from the agreement. Ms Badsey and Ms Kleinschmidt were
adamant that at no stage prior to signing the purchase and sale
agreement
did the appellants indicate that they intended to purchase
the property for their daughter or that her approval would be a
precondition
to the conclusion of a valid sale. It was Ms Badsey's
evidence, corroborated by Ms Kleinschmidt, that Ms Badsey had offered
to
email the purchase and sale agreement to the appellants for their
consideration prior to them making a formal offer and signing
the
agreement.
[56]
They both testified that it was the first appellant who insisted that
he follow them to the respondent's
offices so that he could make a
formal offer on the same day. In this respect their evidence was
reliable and their evidence must
be accepted. I agree with the
finding of the court
a quo
that the first appellant's version
is improbable when considered against the totality of the evidence.
There is no mention made
in the purchase and sale agreement that it
is subject to the first appellant's daughter's approval for the
property. Ms Badsey's
evidence was that, had there been such a
requirement, she would have inserted it as a special condition in the
purchase and sale
agreement. What it is also noteworthy is that the
special terms and conditions clause which appears on page 2 of the
purchase and
sale agreement is blank. Both the appellants however
have initialled next to such blank clause. I agree with the court
a
quo's
finding that had this been a requirement Ms Badsey would
have recorded such condition in the purchase and sale agreement.
[57]
Secondly, when the appellants were informed by Ms Badsey in
her email of 25 March 2015
that their offer had been accepted, the
first appellant's response on 26 March 2015 was that he had done an
estimate of the cost
of the renovations and it would be too expensive
for him to do so and consequently declined his offer to purchase the
unit. However,
there is no mention in the email that he made Ms
Badsey aware that the sale would be subject to his daughter's
approval and that
she had not approved same. That he could no longer
afford to purchase the unit was reiterated in his further email of 26
March
2015.
[58]
Similarly, he once again makes no mention of the agreement being
subject to his daughter's approval.
One would have expected that if
he was purchasing the unit for his daughter and if it was subject to
her approval he would have
mentioned this at the first opportunity.
He had several email exchanges with Ms Badsey in which an opportunity
presented itself
for him to mention this but he failed to do so.
[59]
In addition, I agree with the further submission of Mr
Hoar
that clause 27.2 of the purchase and sale agreement contains a
relevant provision which reads as follows:
'This
document shall form the whole and only contract between the SELLER
and the PURCHASER and any representations made by or on
behalf of the
SELLER or Wakefields shall not affect it unless set out herein.'
[60]
This is often referred to as a 'whole agreement' clause and the
appellants would not be able
to resile from the agreement because of
the existence of this clause. The appellants have also not alleged or
proved any fraud
on the part of Ms Badsey and consequently they would
be bound by the provisions of the agreement.
[2]
[61]
At the appeal hearing a further defence was raised by the appellants,
that of
iustus
error.
Although this had not been
pertinently raised I deemed it in the interests of justice for the
parties to file supplementary heads
of argument in relation to this
issue. Mr Pitman submitted that the appellants were unsophisticated
persons who relied on the estate
agent Ms Badsey. He once again
submitted that the estate agent went through the agreement with them
but did not inform them of
the commission clause.
[62]
Their case had been pleaded inelegantly and consequently they did not
agree to the commission
clause as it had not been explained to them.
Their potential liability for payment of commission arising from
clause 17 ought to
have been explained to them. It is because of the
failure by Ms Badsey to explain the contents of clause 17 to them and
their possible
liability emanating from the provisions thereof should
they fail to comply with the agreement, that he submits that they
were 'induced'
into signing the agreement.
[63]
The defence of
iustus error
has been raised at a very late
stage and Mr
Hoar
is quite correct that it had never been
pleaded. At the outset the below remarks in
Christie's The Law of
Contract in South Africa
are apposite:
'When
people say they made a mistake in entering into a particular contract
a lawyer's response, after listening to the story, will
often be that
this is the sort of mistake for which the law can provide no remedy.
Paraphrasing the description of the action as
mistaken, the lawyer
will say that it was ill-advised or due to an error of judgment. If
the law were to give relief from what,
in retrospect, are seen as
errors of judgment, the whole concept of a contract as a binding and
enforceable agreement would be
destroyed.'
[3]
[64]
In
National
and Overseas Distributors Corporation (Pty) Ltd v Potato Board
[4]
the appellate division held as follows:
'If
the respondent had been a natural person who had accepted a tender
according to its terms, there is no doubt that a contract
would have
been made when the acceptance was communicated to the tenderer, as by
posting it. It would not be possible for such
a natural person, if he
repudiated, to escape liability by proving that he had posted the
wrong letter or the like. That follows
from the generally objective
approach to the creation of contracts which our law follows
No other approach would be
consistent with fairness or practicality.
Our law allows a party to set up his own mistake in certain
circumstances in order to
escape liability under a contract into
which he has entered. But where the other party has not made any
misrepresentation and has
not appreciated at the time of acceptance
that his offer was being accepted under a misapprehension, the scope
for a defence of
unilateral mistake is very narrow, if it exists at
all. At least the mistake
(error)
would have to be reasonable
(justus)
and it would have to be pleaded.'
[65]
Mr
Hoar
is correct that it is not enough for the appellants to
simply content themselves with an allegation that they were mistaken
in
concluding the purchase and sale agreement, or agreeing to certain
of its terms. They must show that their mistake was
iustus
which involves them alleging and proving a misrepresentation by the
respondent, whether intentional or innocent, that brought about
their
mistaken belief. The appellants must show a misrepresentation by the
respondent before they can rely on
iustus error
to avoid the
agreement.
[66]
Ms Badsey's evidence was that she did not think it necessary for the
appellants to initial the
amendment to the commission clause as the
sellers were responsible for paying the commission. She did not
testify that she informed
the appellants that they did not have to
initial the commission clause as they were not responsible for
payment of the commission
or that the seller was solely responsible
for the payment of commission. There is no evidence to suggest that
Ms Badsey told the
appellants anything which would have misled them
or would have amounted to a misrepresentation.
[67]
I agree with Mr
Hoar
that if the appellants were mistaken as
to the contents of the purchase and sale agreement and in particular
the commission clause
it was due to their failure to properly read
the sale agreement and the commission clause before signing the
document. They are
bound under the
caveat subscriptor
doctrine. In my view there is no evidence to support a defence based
on
iustus error
.
[68]
Having regard to the record of proceedings and the court a quo's
assessment thereof, and who
had the benefit of assessing the
witnesses credibility and demeanour, I can find no misdirection in
the court a quo's acceptance
of the evidence of Ms Badsey as
corroborated by Ms Kleinschmidt and the rejection of the first
appellant's evidence. In addition
and in the light of this, the
grounds of appeal advanced by the appellants cannot succeed for the
reasons advanced in the judgment
and fall to be dismissed.
Costs
[69]
The appellants have been unsuccessful in the appeal and I see no
reason to depart from the usual
rule in relation to costs, namely
that the successful party ought to recoup its costs.
HENRIQUES
J
MLABA
J
Case
Information
Date
of Argument:
19 August 2022
Date
of Judgment:
22 September 2023
Supplementary
Heads:
24 August 2022 & 05 September 2022
Counsel
for the Appellants:
Murray Pitman
Appellants
Attorneys:
Amith Luckan and Company
c/o
Mathew Francis Inc
21
Cascades Crescent
Montrose
Pietermaritzburg
Tel:
031 404 9111
Email:
roshan@luckanandco.co.za
Ref:
RS:N-124/15: GCL
Counsel
for the Respondent:
S Hoar
Respondent's
Attorneys:
Meumann White Attorneys
5th
Floor MB House
641
Peter Mokaba Ridge
Berea
Durban
Email:
kirsty@meumannwhite.co.za
Ref:
151806N Govender/ KO
c/o
ER Browne Inc
167
- 169 Hoosen Haffejee Street
Pietermaritzburg
[1]
Bhikhagee
v Southern Aviation (Pty) Ltd
1949
(4) SA 105
(E);
Mathole
v Mothle
1951 (1) SA 256
(T);
George
v Fairmend
(Pty) Ltd
1958 (2) SA 465
(A) at 472A;
Moshal
Gevisser (Trademarket) Ltd v Midlands Paraffin Co.
1977
(1) SA64 (N).
[2]
Wells v
South African Alumenite Company
1927 AD 69
at 73.
[3]
GB Bradfield Christie's Law of Contract in South Africa 8 ed at 384.
[4]
National and Overseas Distributors Corporation (Pty) Ltd v Potato
Board
1958 (2) SA 473
(A) at 479E-H.