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[2022] ZAKZPHC 63
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SZC Investments (Pty) Ltd v Swindon Property Services (Pty) Ltd (7909/21P) [2022] ZAKZPHC 63 (27 October 2022)
IN
THE HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
DIVISION, PIETERMARITZBURG
Case
no: 7909/21P
In
the matter between:
SCZ
INVESTMENTS (PTY) LTD
EXCIPIENT/DEFENDANT
and
SWINDON
PROPERTY SERVICES (PTY) LTD
RESPONDENT/PLAINTIFF
Coram: Koen
J
Heard: 16
August 2022
Delivered: 27
October 2022
ORDER
The
following order is granted:
(a)
The exception is upheld with costs;
(b)
The plaintiff is afforded the
opportunity to amend its particulars of claim within 20 days from the
date of the grant of this order,
failing which the plaintiff’s
claim shall be dismissed with costs.
JUDGMENT
Koen
J
[1]
This judgment deals with an exception
taken to the plaintiff’s claim for estate agents commission, on
the basis that the particulars
of claim do not disclose a valid cause
of action.
[2]
The plaintiff’s claim arises in
respect of an agreement of letting of immovable property (the
agreement) concluded on 4 or
7 June 2021 between the defendant and a
tenant. Mr Thor-Christian Schwanzer (Mr Schwanzer), an estate agent,
represented the plaintiff
in negotiating the conclusion of the
agreement. The agreement contained a
stipulatio
alteri
providing for the payment of
commission by the defendant in favour of the plaintiff. The benefit
of the
stipulatio
was accepted by Mr Schwanzer on behalf of the plaintiff on 7 June
2021.
[3]
The exception is to the effect that in
negotiating the conclusion of the agreement during June 2021 Mr
Schwanzer was an estate agent
and rendering services as an estate
agent as provided in the Estate Agency Affairs Act 112 of 1976 (‘the
Act’), but
that he was, in terms of s 34A of the Act not
entitled to remuneration as he did not hold a valid fidelity fund
certificate.
[4]
The definition of estate agent in the
Act, is as follows:
'"estate
agent" –
(a)
means any person who for the acquisition of gain
on his own account or in partnership, in any manner holds himself
out
as a person who, or directly or indirectly advertises that he, on the
instructions of or on behalf of any other person –
(i)
sells or purchases or publicly exhibits for sale
immovable property or any business undertaking or negotiates in
connection therewith or canvasses or undertakes or offers to canvas a
seller or purchaser therefor; or
(ii)
lets or hires or publicly exhibits for hire immovable property
or any business undertaking or negotiates in connection
therewith or
canvasses or undertakes or offers to canvass a lessee or lessor
therefor; or
(iii)
collects or receives any moneys payable on account of a lease of
immovable property or any business undertaking; or
(iv)
renders any such other service as the Minister on the recommendation
of the board may specify from time to time by notice in
the
Gazette
;
(b)
for purposes of section 3(2)(a), includes any
director of a company or a member who is competent and entitled
to
take part in the running of the business and the management, or a
manager who is an officer, of a close corporation which is
an estate
agent as defined in paragraph
(a)
;
(c)
for purposes of sections 7, 8, 9, 12, 15, 16, 18,
19, 21, 26, 27, 30, 33 and 34B, includes –
(i)
any director of a company, or a member referred to in
paragraph
(b)
, of a close corporation which is an estate agent
as defined in paragraph
(a)
; and
(ii)
any person who is employed by an estate agent as defined in
paragraph
(a)
and performs on his behalf any act referred to
in subparagraph (i) or (ii) of the said paragraph; . . .’
[5]
The contention in the exception
initially was that the provisions of paragraphs
(a)
and
(b)
of the definition of estate agent applied to Mr Schwanzer. At the
commencement of argument, the defendant’s counsel however
said
that he would also be relying on the provisions of paragraph
(c)
of the definition of ‘estate agent.’ The plaintiff agreed
that the defendant could rely on the provisions of sub-paragraph
(c).
Paragraph 19A of the particulars of claim, set out below, was also
amended by consent, to allege positively that at the material
time
when negotiating the conclusion of the agreement Mr Schwanzer acted
as an ‘employee’ of the plaintiff.
[6]
An amendment was also effected to the
exception by consent, by the concluding paragraph thereto, being
paragraph 10, being amplified
by the words indicated in bold below,
to read:
‘
In
the premises, no valid cause of action is disclosed by the Plaintiff,
as envisaged in terms of section 26 read with section 34A(1) or
(2) of the Act.
’
[7]
Section 26 of the Act provides:
‘
Prohibition
of rendering of services as estate agent in certain circumstances. –
No person shall perform any act as an estate
agent unless a valid
fidelity fund certificate has been issued to him or her and to every
person employed by him or her as an estate
agent and, if such person
is –
(a)
a company, to every director of that company;
or
(b)
a close corporation, to every member referred to
in paragraph
(b)
of the definition of "estate agent" of that corporation.’
[8]
Section 34A of the Act provides:
'Estate
agent not entitled to remuneration in certain circumstances. –
(1) No estate agent shall be entitled to any remuneration
or other
payment in respect of or arising from the performance of any act
referred to in subparagraph (i), (ii), (iii) or (iv)
of paragraph
(a)
of the definition of "estate agent", unless at the time of
the performance of the act a valid fidelity fund certificate
has been
issued –
(a)
to such estate agent; and
(b)
if such estate agent is a company, to every
director of such company or, if such estate agent is a close
corporation,
to every member referred to in paragraph (b) of the
definition of "estate agent" of such corporation.
(2)
No person referred to in paragraph
(c)
(ii) of the definition
of "estate agent", and no estate agent who employs such
person, shall be entitled to any remuneration
or other payment in
respect of or arising from the performance by such person of any act
referred to in that paragraph, unless
at the time of the performance
of the act a valid fidelity fund certificate has been issued to such
person.’
[9]
The allegations in the particulars of
claim specifically implicated by the exception, as amended during
argument, read as follows:
‘
19A
The Plaintiff, every director of the Plaintiff as well as
Thor-Christian Schwanzer, an employee of the plaintiff, were
all in
possession of valid fidelity fund certificates at the time of the
conclusion of the Agreement. Copies of the fidelity fund
certificates
are annexed hereto, marked “POC 6” to “POC 12”.’
[1]
[10]
Annexure "POC 11" is a
fidelity fund certificate issued to Mr Schwanzer as ‘Non-Principal
at firm, professional
practitioner in real estate’ in respect
of a close corporation, Hancock and Pavlou CC, by the Estate Agency
Affairs Board,
valid from 11 January 2021 to 31 December 2021.
Annexure "POC 12" is similarly a fidelity fund certificate
issued
by the Estate Agency Affairs Board to Mr Schwanzer as
‘Non-Principal at firm, professional practitioner in real
estate,’
but in respect of the plaintiff, except that it is
valid only from 6 September 2021 to 31 December 2021. It does not
cover the
period when the agreement was negotiated and concluded. The
fidelity fund certificate, annexure “POC12”, was not a
valid fidelity fund certificate at the time that either the lease
agreement was concluded or the benefits of the
stipulatio
alteri
were accepted by Mr
Schwanzer.
[11]
It was submitted by the plaintiff that
the fidelity fund certificate, annexure “POC11” issued in
respect of the Close
Corporation ‘Hancock and Pavlou CC’,
which did cover the period when the agreement was concluded, was a
valid fidelity
fund certificate which had been issued to Mr
Schwanzer, having regard to the objects and purpose of the Act, and
that it complied
with the provisions of s 34A(2) of the Act,
accordingly that Mr Schwanzer and the plaintiff were entitled to
claim the commission.
This is disputed by the defendant as a matter
of law.
[12]
It is the answer to that issue that
forms the crux of this judgment. If annexure “POC 11” is
not a valid fidelity fund
certificate as required by law, then Mr
Schwanzer and the plaintiff will not be entitled to the commission
claimed.
[13]
The Act does not require an express
provision that a fidelity fund certificate required to be held by an
employee estate agent needs
to refer to the identity of his/her
employer in order to be valid. The defendant however argues that
having regard to the objects
of the Act, its provisions, and the
requirements in regulations issued pursuant to the Act, that this is
clearly required.
[14]
Applications for and the issue of
fidelity fund certificates are regulated in terms of s 16 of the Act
and the regulations published
pursuant to the provisions of s 33 of
the Act.
[15]
Section 16 of the Act requires that:
‘
(1)
Every estate agent or prospective estate agent, . . . shall, within
the prescribed period and
in the prescribed manner
, apply to
the board for a fidelity fund certificate, and such application shall
be accompanied by the levies referred to in section
9(1)
(a)
and the contribution referred to in section 15.
(2)
. . .
(3)
Subject to sections 28 (1), 28 (5) and 30 (6), if the board upon
receipt of any application referred to in subsection (1) or
(2) and
the levies and contribution referred to in those subsections, is
satisfied that the applicant concerned is not disqualified
in terms
of section 27 from being issued with a fidelity fund certificate, the
board shall
in the prescribed form
issue to the applicant
concerned a fidelity fund certificate or a registration certificate,
as the case may be, which shall be
valid until 31 December of the
year to which such application relates.’
[16]
The
current regulations
[2]
do not
prescribe a set form which the fidelity fund certificate has to
follow, or what it has to contain. Some assistance can however
be
obtained from regulations which preceded the current regulations,
which although repealed by subsequent regulations, in part
contained
similar, if not identical provisions to those which applied when a
standard form was specifically prescribed for fidelity
fund
certificates.
[17]
Annexure ‘A’ to the
regulations in Government Notice R1798 of 1986, published in
Government Gazette
10403 of 29 August 1986, prescribed the form which a fidelity fund
certificate had to follow. Apart from the full names of the
agent
having to be reflected, the form provided for the ‘Name of
firm/company/close corporation’ and an address to
be specified.
Regulations 10 and 12 thereof provided as follows:
'10
The holder of a fidelity fund certificate or a registration
certificate shall inform the board within 14 days of any change
in
the information supplied to the board at the time of applying for the
issue to him of such certificate and, if the information
appearing on
the certificate is no longer applicable or has changed, such
certificate shall forthwith be for warded to the board
for
appropriate amendment thereof or for the issue of a new certificate
in substitution therefor.’
and
‘
12(1)
If a fidelity fund certificate was issued to an independent
contractor or any person referred to in paragraph
(c)
(ii) of
the definition of "estate agent" in section 1 of this Act,
and such person ceases to be employed by or associated
with the
employer mentioned in such certificate that employer shall, within 14
days of such person ceasing to be in his employ,
or to be thus
associated, return such certificate to the board together with a
letter informing the board of such fact and, if
such information is
available, stating with whom that person is taking up employment or
becoming associated.
(2)
The provisions of subregulation (1) shall
mutatis mutandis
apply to a registration certificate issued to any person referred to
in paragraph
(cA)
of the definition of "estate agent"
in section 1 of this Act.
(3)
If the employer concerned is unable for any reason to return the
certificate as required by subregulation (1) or (2), as the
case may
be, the employer shall within 14 days of the termination of
employment or ceasing to be associated, inform the board of
that
fact, stating the reasons why it is unable to return such certificate
as well as furnishing all available information concerning
the
whereabouts of such employee or independent contractor.’
[18]
The regulations published in Government
Notice R1798 were withdrawn by Government Notice 373 of 2006
published in
Government Gazette
28588 of 2 March 2006. These regulations did not prescribe a form,
and did not specifically require in express terms that a fidelity
fund certificate had to be issued to an estate agent employed by a
company with specific reference to that company only. It however
contained regulations 10 and 12 in terms essentially similar to that
in Government Notice R1798.
[19]
The current relevant regulations
governing the issuing of fidelity fund and registration certificates
promulgated in Government
Notice R2a published in
Government
Gazette
39743 of 26 February 2016,
do not expressly require that the fidelity fund certificate must be
issued to an estate agent specifically
in regard to a particular
firm. Nor is a set form prescribed in the regulations as to what a
fidelity fund certificate should contain.
The regulations however
contain provisions in regulations 9 and 11(2) that are similar to
regulations 10 and 12(3) of the prior
regulations. Regulations 9 and
11(2) read:
‘
9.
The holder of a fidelity fund certificate or a registration
certificate, as the case may be, shall inform the Board within
fourteen
(14) days of any change in the information supplied to the
Board at the time of applying for the issue to him/her of such
certificate
and, if the information appearing on the certificate is
no longer applicable or has changed, such certificate shall forthwith
be
forwarded to the Board for the appropriate amendment thereof or
for the issue of a new certificate in substitution therefor.’
and
‘
11(2)
If the employer concerned is unable, for any reason, to return the
certificate as required by sub-regulation (1) or (2), as
the case may
be, the employer shall within fourteen (14) days of the termination
of employment or ceasing to be associated, inform
the Board of that
fact, stating the reasons why it is unable to return such certificate
as well as furnishing all available information
concerning the
whereabouts of such employee or independent contractor.’
[20]
The former regulation 12(1) is omitted
from the present regulations, however the fact that the present
regulation 11(2) still refers
to such certificates issued to an
employee and imposing duties on the employer must be interpreted with
the aid of sections 11
and/or 12 of the Interpretation Act 33 of
1957, and the operational obligations under regulation 12(1) of the
previous regulations
must be regarded as those still in force.
Sections
11 and 12 of the Interpretation Act provide:
‘
11.
Repeal and substitution. — When a law repeals wholly or
partially any former law and substitutes provisions for the law
so
repealed, the repealed law shall remain in force until the
substituted provisions come into operation.
12.
Effect of repeal of a law. — (1) Where a law repeals and
re-enacts with or without modifications, any provision of a former
law, references in any other law to the provision so repealed shall,
unless the contrary intention appears, be construed as references
to
the provision so re-enacted.
(2)
Where a law repeals any other law, then unless the contrary intention
appears, the repeal shall not —
(a)
revive anything not in force or
existing at the time at which the repeal takes effect; or
(b)
affect the previous operation of any
law so repealed or anything duly done or suffered under the
law so
repealed; or
(c)
affect any right, privilege,
obligation or liability acquired, accrued or incurred under any law
so repealed; or
(d)
affect any penalty, forfeiture or
punishment incurred in respect of any offence committed against
any
law so repealed; or
(e)
affect any investigation, legal
proceeding or remedy in respect of any such right, privilege,
obligation,
liability, forfeiture or punishment as is in this
subsection mentioned, and any such investigation, legal proceeding or
remedy
may be instituted, continued or enforced, and any such
penalty, forfeiture or punishment may be imposed, as if the repealing
law
had not been passed.'
[21]
These
provisions all have significance only in the context of the fidelity
fund certificate held by an employee estate agent being
specific to
his/her employer. Any possible casus omissus by the legislation no
longer prescribing the actual form which a fidelity
fund certificate
should follow, should be avoided. It is possible to do so by a
purposive interpretation of the terms of the previous
and current
regulations. The inference that the legislation had left a gap
intentionally in not prescribing a form for fidelity
fund
certificates to follow as indicating a change in intention, is not
justified or sufficiently justified.
[3]
Indeed the contrary is the case.
[22]
Section 32A(1)
(b)
(i)
of the Act furthermore provides:
‘
Any
inspector furnished with inspection authority in writing by the board
may conduct an investigation to determine whether the
provisions of
this Act are being or have been complied with and may, subject to
subsection (5), for that purpose, without giving
prior notice, at all
reasonable times –
(a)
. . .
(b)
order any estate agent or the manager,
employee or agent of any estate agent –
(i)
to produce to him the fidelity fund
certificate of that estate agent . . .'
If
an inspector is to be in a position to order an employer to produce
the fidelity fund certificate of an employee, it follows
that the
inspector must be in a position to know who the employer of the
employee is in any given estate agency relationship.
[23]
Regulation 11 of the Code of Conduct
1992, contained in Government Notice R3415 published in Government
Gazette 14489 of 24 December
1992, provides:
‘
Every
estate agent who is the sole proprietor of an estate agency business
or a partner in a partnership or a director of a company
or a member
of a close corporation contemplated in paragraph (b) of the
definition of "estate agent" in section 1 of
the Act
carrying on the business of an estate agent, shall be held
responsible for any contravention of or failure to comply with
this
code of conduct by any other partner, director, or member or
by
any estate agent in the service of such
sole proprietorship,
partnership, company or close corporation, unless he has prior to
such contravention or failure to comply
taken all reasonable steps to
prevent the same and could not in the circumstances have prevented
such contravention or failure
to comply.’
[24]
If the name of the employer of the
employee estate agent is reflected on the fidelity fund certificate,
then there can be no doubt
as to the identity of the employer
implicated by any contravention or failure on the part of an employee
estate agent to comply
with the provisions of the Act, the
regulations, or the Code of Conduct, as the employment relationship
will appear ex facie the
fidelity fund certificate.
[25]
The standing of an employer of an estate
agent employee furthermore appears intrinsically linked to the
protection of the public
and the validity of an employee’s
fidelity fund certificate. Should it happen that an employer no
longer has a valid fidelity
fund certificate, it cannot be suggested
that the fidelity insurance remains in place to cover the employees
of the employer.
[26]
It is accordingly not surprising that as
a matter of practice the fidelity fund certificate form which the
Board continues to issue
pursuant to applications in terms of s 16 of
the Act provides for the identity of the employer and its address to
be stated. If
the employer’s details change, then the
certificate must be surrendered and amended. And it is significant
that s 16 of the
Act requires that an application for a fidelity fund
certificate has to be made ‘in the prescribed manner.’
[27]
The above considerations all point to a
valid fidelity fund certificate being required to be issued in
respect of an employee estate
agent specifically with reference to
the employer which employs him or her.
[28]
The prohibition against receipt of
remuneration in s 34A(2) extends to both the employee and his/her
employer where the employee
does not have the required fidelity fund
certificate. This makes it clear that the fidelity fund certificate
must attach to the
employee estate agent in the context of his
employment with a particular employer whose name is required to be
stipulated on the
certificate.
[29]
The objects of the Act, with reference
to its preamble, are:
‘
To
provide for the establishment of an Estate Agency Affairs Board and
an Estate Agents Fidelity Fund: for the control of certain
activities
of estate agents in the public interest; and for incidental
matters.’
[30]
The above interpretation and the
conclusion I have reached is purposive and also consistent with the
context within which provision
is made for the prohibition against
the receipt of remuneration and the requirement for a valid fidelity
fund certificate to be
held by an employee agent. It is also
consistent with the objects and purpose of the Act.
[31]
The requirement of a fidelity fund
certificate is also a measure of protection for the public. The
requirements for the issue of
a valid fidelity fund certificate are
stringent and apply, in the context of the prohibition in s 34A(2) of
the Act, also in respect
of employees, being a 'person referred to in
paragraph
(c)
(ii)
of the definition of “estate agent.”’ The
prohibition is not confined to the employee, but also to an ‘estate
agent who employs such a person’, both of whom are precluded
from being:
‘
entitled
to any remuneration or other payment in respect of or arising from
the performance by such person of any act referred to
in that
paragraph, unless at the time of the performance of the act a valid
fidelity fund certificate had been issued to such person.’
[32]
The failure on the part of Mr Schwanzer
to have alleged and annexed a fidelity fund certificate issued to him
covering the relevant
period when he rendered services as an estate
agent to the defendant, disclosing the name of the plaintiff as his
employer, is
accordingly fatal to the plaintiff’s claim as
presently pleaded. The exception must therefore succeed. In
accordance with
accepted practice, a time period will be specified to
allow the plaintiff to amend its particulars of claim to cure the
cause of
the exception, if possible.
[33]
Regarding the costs of the exception,
the basis on which the exception succeeds only became firmly
crystalized following the amendments
to the particulars of claim and
the exception. The underlying argument throughout however always was
that the plaintiff’s
claim was not competent because Mr
Schwanzer did not hold a valid fidelity fund certificate in respect
of his employment with the
respondent. As is evident from the
allegations in the particulars of claim, even prior to amendment, the
plaintiff has always accepted
that Mr Schwanzer would require a valid
fidelity fund certificate. If it contended that no such certificate
was required, and the
amendment to the exception made it evident,
from that point in time, that a fidelity fund certificate was
required, the plaintiff
could then have conceded the exception. In
that event an order that each party pay its own costs, or some other
order, might have
been appropriate.
[34]
That was however not the stance adopted
by the plaintiff. It persisted with its opposition to the exception
on the basis that annexure
"POC11" satisfied such
requirement. I have concluded that it does not. In those
circumstances the defendant has been
successful and there is no
reason why it should not be awarded its costs of the exception.
[35]
The following order is granted:
(a)
The exception is upheld with costs;
(b)
The plaintiff is afforded the
opportunity to amend its particulars of claim within 20 days from the
date of the grant of this order,
failing which the plaintiff’s
claim shall be dismissed with costs.
KOEN
J
APPEARANCES
For
the excipient: Mr
H.P van Nieuwenhuizen
Instructed
by: Alan
Allschwang and Associates
c/o
Thorpe and Hands Inc
c/o
PGPS Attorneys
Pietermaritzburg
For
the respondent: Ms
B Brown
Instructed
by:
C & A
Friedlander Attorneys
c/o
Austen Smith
Pietermaritzburg
(Ref:
Mr Smythe)
[1]
Annexures "POC6", "POC7", "POC8",
"POC9" and "POC10" are not relevant to the
exception. Annexures "POC6" and "POC7" are
copies of fidelity fund certificates issued to the respondent
on 1
January 2021, annexure "POC8" is a fidelity fund
certificate issued to Dewey Andrew De Villiers of the respondent
on
1 January 2021, annexure "POC9" is a fidelity fund
certificate issued to Te Vaarwerk Marcus Engelbertus of the
respondent on 1 January 2021, and annexure "POC10" is a
fidelity fund certificate issued to Van Schoor Michael-John
of the
respondent on 1 January 2021
[2]
Promulgated in GN R2a,
GG
39743 of 26 February 2016.
[3]
See
LM du Plessis ‘Statute Law and Interpretation’ in WA
Joubert (founding ed) 25(1)
LAWSA
2ed paras 342 and 358, and M van Staden ‘A Comparative
Analysis of Common Law Presumptions of Statutory Interpretation’
(2015) 26 Stellenbosch L Rev 550 at 562.