• Law Reports
  • Boutina (Pty) Ltd v MEC for the Provincial …

Boutina (Pty) Ltd v MEC for the Provincial Department of Human Settlements (Mpumalanga) and Another (4028/2021) [2022] ZAMPMBHC 76 (13 October 2022)

85 Reportability
Contract Law
View PDF SAFLII Source
Share WhatsApp LinkedIn X Email

Brief Summary

Contract — Specific performance — Deed of sale — Applicant sought payment of R 16 million from the MEC for the Provincial Department of Human Settlements and a conveyancer following misappropriation of funds — Department argued it fulfilled its obligations by paying the conveyancer, who failed to pay the applicant — Court held that the department remained liable to pay the applicant as the conveyancer acted as its agent and misappropriated the funds, thus failing to comply with the deed of sale.

Comprehensive Summary

Summary of Judgment


1. Introduction


This was a motion application in the Mpumalanga Division of the High Court (Main Seat) in which the applicant sought payment of the purchase price allegedly due under a written deed of sale of land, together with interest and costs. The relief was framed as specific performance of the payment obligation arising from the deed of sale.


The applicant was Boutina (Pty) Ltd (“Boutina”), the seller of the immovable property. The first respondent was the MEC for the Provincial Department of Human Settlements (Mpumalanga) (“the department”), which had undertaken in the deed of sale to pay the purchase price on behalf of a municipality. The second respondent was MT Silinda & Associates Inc (“Silinda”), the conveyancer appointed to attend to transfer. A municipality was referred to in the transaction (as purchaser and beneficiary of the transfer), but no relief was sought against the municipality in this application.


The application arose after the department paid the purchase price to the appointed conveyancer, transfer was effected into the municipality’s name, but Boutina was not paid because the conveyancer misappropriated the funds. Only the department opposed the application. The department’s opposition was advanced on the basis that it had discharged its payment obligation by paying the purchase price to Silinda in accordance with the deed of sale, and that it should not be compelled to “pay twice”.


The general subject-matter of the dispute concerned the allocation of risk and liability where a conveyancer, appointed under a deed of sale and associated mandate, receives the purchase price intended for the seller but fails to pay it over due to misappropriation.


2. Material Facts


On 24 March 2020, Boutina, the department, and the municipality concluded a written deed of sale in terms of which Boutina sold its land to the municipality for R16 million. The deed of sale contained express provisions regulating payment and transfer. Under clause 3.1.1, the department undertook to pay the purchase price on behalf of the municipality to Silinda, to be held in trust pending registration of transfer into the municipality’s name. Under clause 6.1, the department appointed Silinda to attend to transfer. Under clause 7.1, the department was responsible for transfer costs, including conveyancing fees.


On the same date, 24 March 2020, the department and Silinda concluded a separate written service level agreement relating to the registration of transfer. The service level agreement recorded, among other things, undertakings concerning financial management and internal controls, contemplated the department’s instruction to prepare transfer documents and “effect payment at the end of the transfer”, and provided for Silinda’s entitlement to transfer fees. The department later relied on this agreement as the basis for claiming damages from Silinda.


On 26 March 2020, the department paid R16 million into Silinda’s business account. On 23 September 2020, Boutina executed a power of attorney in favour of Silinda to appear before the Registrar of Deeds for purposes of passing transfer. The property was transferred to the municipality on 20 May 2021.


After transfer, Boutina demanded payment of the purchase price on 1 June 2021 from the department and Silinda. On 8 June 2021, a meeting occurred between Mr Silinda and Boutina’s representative, where Mr Silinda confirmed that the purchase price had been paid into Silinda’s business account and that Silinda no longer had the money.


Further steps were taken by the department against Silinda. On 13 December 2021, the department issued summons against Silinda and Mr Silinda, claiming payment of R16 million and alleging breach of the service level agreement; the action was not defended and the department indicated it intended seeking default judgment. On 6 September 2022, the department brought an urgent application seeking, among other relief, an interdict restraining transactions on Silinda’s bank account pending recovery proceedings; in that urgent application the department described Silinda and Mr Silinda as appointed “transferring agents” and alleged they had failed to execute their mandate.


The department did not dispute that it paid the purchase price to Silinda, that transfer occurred, or that Boutina did not receive the purchase price. The central dispute was the legal effect of payment to Silinda: the department maintained that payment to Silinda constituted compliance with its obligation under the deed of sale, and that it was not indebted to Boutina.


3. Legal Issues


The primary legal question was whether, on the proper construction and application of the deed of sale and related arrangements, the department’s payment of the purchase price to Silinda discharged the department’s contractual obligation to ensure payment of the purchase price to Boutina, notwithstanding Silinda’s misappropriation.


This required determination of the legal character of Silinda’s role in the transaction, particularly whether Silinda acted as an agent/mandatary for the department (and the consequences of that characterisation), and the significance of the power of attorney granted by Boutina for transfer purposes.


The dispute was predominantly one of application of law to largely common-cause facts. The facts of payment to Silinda, non-payment to Boutina, and misappropriation were treated as established; the contested issue was the legal conclusion as to where the risk and liability lay in consequence of those facts.


4. Court’s Reasoning


The court approached the matter by analysing the relationships created by the deed of sale, the service level agreement, and the power of attorney, and by identifying the operative legal framework as one of mandate/agency.


A central finding was that Silinda acted, “in fact and law”, as the agent for the department in terms of the deed of sale and the service level agreement. The court held that Silinda held a mandate to register transfer, receive the purchase price, and pay Boutina on the department’s behalf. In support of that conclusion, the court referred to the department’s own conduct in related proceedings: the department’s urgent application and issued summons against Silinda were both premised on Silinda’s mandate and an alleged breach of obligations arising from that mandate and the service level agreement.


The court set out the applicable principle that a contract of mandate is a consensual agreement in which a mandatary undertakes to perform a commission for the mandator. On this basis, the department was characterised as the mandator and Silinda as the mandatary, with the mandate encompassing conveyancing and payment-related functions linked to the transfer.


The court distinguished Boutina’s power of attorney from the broader mandate under which Silinda acted. It held that the power of attorney granted by Boutina to Silinda was confined to appearing before the Registrar of Deeds for transfer and reflected conveyancing convention; it did not shift the substantive payment responsibilities regulated by the deed of sale. The court emphasised that the broader rights and obligations between the parties were governed by the deed of sale, and that the rights and obligations between the department and Silinda arose from both the deed of sale and the service level agreement.


Having characterised Silinda as the department’s agent in relation to receipt and onward payment of the purchase price, the court concluded that the department’s mere act of paying the purchase price to Silinda did not amount to performance of the obligation to pay Boutina, because the payment “did not reach Boutina”. The misappropriation by Silinda, as the department’s agent for purposes of receiving and paying out the purchase price, meant that the department had not complied with its payment obligation to Boutina under the deed of sale despite the transfer of funds to Silinda.


In parallel, the court held that Silinda, having misappropriated money due to Boutina, was also indebted to Boutina. Since Silinda did not oppose the application, Boutina was entitled to judgment against Silinda as well. The court further noted that, even if the department were ordered to pay Boutina, the department was not without recourse because it had already instituted proceedings against Silinda and Mr Silinda to recover the misappropriated funds.


On costs, the court applied the general principle that costs follow the result, finding no reason to depart from it.


5. Outcome and Relief


The court granted judgment in favour of Boutina. It ordered the first and second respondents, jointly and severally (the one paying, the other to be absolved), to pay R16,000,000 to the applicant.


The court further ordered interest on the amount at 7% per annum, calculated from 21 May 2021 to date of payment.


The court ordered the first and second respondents, jointly and severally (the one paying, the other to be absolved), to pay the applicant’s costs.


Cases Cited


Ncqula v Muller’s Book Shop 1960 4 All SA 218 (E); 1963 4 SA 802 (E).


Legislation Cited


No legislation was cited in the judgment.


Rules of Court Cited


No rules of court were cited in the judgment.


Held


The court held that Silinda acted as the department’s agent/mandatary under the deed of sale (supported by the service level agreement) for purposes including receipt of the purchase price and payment to Boutina on registration of transfer. Because the purchase price did not reach Boutina due to Silinda’s misappropriation, the department had not performed its contractual obligation to pay the purchase price to Boutina and therefore remained indebted to Boutina. Silinda was likewise indebted to Boutina as the party who misappropriated the funds. Judgment was accordingly granted against both the department and Silinda, jointly and severally, with interest and costs.


LEGAL PRINCIPLES


A contract of mandate arises where a mandatary undertakes, by agreement, to perform a commission for a mandator; where the mandatary acts within the scope of the mandate, the legal consequences of the mandatary’s performance (and non-performance) are attributed in accordance with the mandate relationship as recognised by law.


Where a conveyancer receives funds as agent/mandatary for a party obliged to pay, the payer’s obligation to the intended payee is not treated as discharged merely because the payer has transferred the funds to the agent, if the funds do not reach the creditor due to the agent’s misappropriation in breach of the mandate.


A power of attorney given to a conveyancer to appear before the Registrar of Deeds for transfer purposes is conceptually distinct from, and does not by itself reallocate, the broader substantive payment obligations created by the deed of sale and related contractual arrangements.


In the absence of reasons justifying deviation, costs follow the result.

About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Mpumalanga High Court, Mbombela
SAFLII
>>
Databases
>>
South Africa: Mpumalanga High Court, Mbombela
>>
2022
>>
[2022] ZAMPMBHC 76
|

|

Boutina (Pty) Ltd v MEC for the Provincial Department of Human Settlements (Mpumalanga) and Another (4028/2021) [2022] ZAMPMBHC 76 (13 October 2022)

REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA,
MPUMALANGA
DIVISION (MAIN SEAT)
Case
Number: 4028/2021
REPORTABLE:
YES
/ NO
OF
INTEREST TO OTHER JUDGES:
YES
/NO
REVISED.
In
the matter between:
BOUTINA
(PTY)
LTD
Applicant
and
THE
MEC FOR THE PROVINCIAL
DEPARTMENT
OF HUMAN SETTLEMENTS
(MPUMALANGA)
First Respondent
MT
SILINDA & ASSOCIATES
INC
Second Respondent
JUDGMENT
Roelofse
AJ:
INTRODUCTION
[1]
The applicant (Boutina) seeks payment of an amount of R 16 million
from
the first and second respondents jointly and severally, the one
paying, the other to be absolved.
[2]
Boutina’s cause of action is founded upon a written deed of
sale
(the deed of sale) of land. Boutina is seeking specific
performance of the deed of sale in terms of which the first
respondent
(the department) agreed to pay the purchase price for
Boutina’s land on behalf of the third respondent (the
municipality).
[3]
No relief is sought against the municipality.
[4]
The second respondent (Silinda) was appointed as conveyancer in terms
of the deed of sale. The department paid the purchase price to
Silinda but Silinda failed to pay Boutina and misappropriated the

full purchase price.
[5]
Only the department opposes the application and has filed an
answering
affidavit.
THE DEED OF SALE
[6]
On 24 March 2020, Boutina, the department and the municipality
entered
into a written deed of sale in terms of which Boutina sold
its land to the municipality for R 16 million.
[7]
In terms of clause 3.1.1 of the deed of sale, the department agreed
to
pay the purchase price on behalf of the municipality to Silinda to
be held in trust until the date of registration of transfer of
the
land into the name of the municipality.
[8]
In terms of clause 6.1 of the deed of sale, the department appointed
Silinda
who had to cause the transfer of the property.
[9]
In terms of clause 7.1 of the deed of sale, the department was
responsible
for all the costs of transfer including the conveyancer’s
fees.
SERVICE LEVEL AGREEMENT
[10]
On 24 March 2020, the department and Silinda entered into a separate
written service level
agreement for the registration of transfer of
Boutina’s land to the municipality (the service level
agreement).
[11]
In terms of
the service level agreement: Silinda undertook that, in the
performance of professional duties, he shall keep an effective,

efficient and transparent financial management and internal control
system in place
[1]
; Silinda
would be liable for damages suffered by the department as a result of
Silinda’s conduct
[2]
; the
department would instruct Silinda to prepare the necessary transfer
documents and cause Boutina’s property to be transferred
to the
municipality and to effect payment at the end of the transfer
[12]
[3]
;
Silinda would be entitled to the transfer fees
[4]
;
the department would forward the money to Silinda when the properties
have been transferred
[5]
.
EVENTS SUBSEQUENT TO THE
DEED OF SALE AND THE SERVICE LEVEL AGREEMENT
[13]
On 23 September 2020, Boutina gave a power of attorney to pass
transfer of the land
to the municipality to Silinda. In terms of the
power of attorney, Boutina nominated, constituted and appointed
Silinda ‘…
with power of substitution to be the true
and lawful Attorneys and Agent/s of the Transferor [Boutina] to
appear before the REGISTRAR
OF DEEDS…..’
[14]
On 26 March 2020, the department paid the purchase price in the
amount of R 16 million
to Silinda’s business account. The land
was transferred to the municipality on 20 May 2021.
[15]
On 1 June 2021, Boutina demanded payment of the purchase price from
the department and
Silinda.
[16]
On 8 June
2021, Mr. Silinda and Boutina’s Mr. Marius Deon Mostert
[6]
met. At the meeting, Mr. Silinda confirmed that the purchase price
was paid into Silinda’s business account and that Silinda
no
longer has the money.
[17]
On 6 September 2022, the department launched an urgent application,
inter alia
, interdicting Silinda, Mr. Silinda and certain
banks from transacting Silinda’s bank account pending
finalization of an action
to be instituted by the department for the
recovery of the R 16 million paid to Silinda in terms of the deed of
sale.
[18]
In the urgent application, the department relied upon the service
level agreement. In paragraph
18.4 of the founding affidavit in the
urgent application, the department alleges that Silinda and Mr.
Silinda were appointed by
the department as “
transferring
agents”
. In paragraph 22 of the founding affidavit in the
urgent application, the department alleges that reasonable grounds
exist that
show that Silinda and Mr. Silinda “…
.are
refusing to execute the mandate which they hold.”
In
paragraph 67 of the founding affidavit in the urgent application, the
department alleges that Silinda and Mr. Silinda “…
.failed
to execute their mandate…..”
.
[19]
On 13 December 2021, the department issued summons against Silinda
and Mr. Silinda. In
support of the department’s claim, the
department relies on the deed of sale and the service level
agreement. The department
alleges that Silinda and Mr Silinda are in
breach of the service level agreement. The department claims payment
of the sum of R
16 million from Silinda and Mr. Silinda.
[20]
Silinda and Mr. Silinda did not deliver a notice of intention to
defend. The department
will be moving for default judgment against
the defendants.
THE DEPARTMENT’S
DEFENCE
[21]
The department denies that it is indebted to Boutina because the
department fully complied
with its obligations in terms of the deed
of sale when the department paid the purchase price to Silinda.
Perhaps, the department’s
defence is best summarised in
paragraph 21 of its answering affidavit where the department states:
‘
The question as to
why Boutina now wants the Court to order the Department to dip again
into the public purse and pay the amount
of R 16 000 000 that it has
already paid, and having done so in compliance with the terms of the
written agreement, is unfathomable
and it is a matter that should be
rejected by the court.’
DISCUSSION
[22]
During argument, Mr Makoti who appeared for the department ably
attempted to convince me
that the department as financier of the
purchase price, has complied with its obligations in terms of the
deed of sale when it
paid Silinda. Unfortunately, he did not sway me
for the law provides otherwise.
[23]
There can be no doubt that in fact and law that Silinda acted as
agent for the department
in terms of the deed of sale and the service
level agreement. Silinda held a mandate to register the transfer,
receive the purchase
price and to pay Boutina on the department’s
behalf. The department itself relies on a breach by Silinda of the
service level
agreement in the action the department has issued
against Silinda. In the urgent application, the department relies on
the mandate
that Silinda held in respect of the deed of sale and
service level agreement.
[24]
A contract
of mandate is a consensual contract between one party, the mandator,
and another, the mandatary, in terms of which the
mandatary
undertakes to perform a mandate or commission for the mandator.
[7]
To this extent, the department was the mandatory and Silinda the
mandatary. Silinda was mandated to act as conveyancer in the deed
of
dale, supported by the service level agreement to register the
transfer, receive the purchase price and to pay Boutina on the

department’s behalf.
[25]
In terms of the power of attorney given by Boutine to Silinda,
Boutine only appointed Silinda
to appear before the Registrar of
Deeds on its behalf. It was confined to that purpose and in
accordance with conveyancing convention.
Without the power of
attorney so given to Silinda by Boutina, transfer could not be
effected. All the other rights and obligations
of the parties to the
sale are found in the deed of sale. The rights and oblidations of the
department and Silinda are found both
in the deed of sale and the
service level agreement.
[26]
The mandate
which Silinda held was to act on behalf of the department. The
mandate was specific in its terms and authorised Silinda
to act on
the department’s behalf. The mandate created a legal
relationship between the department, Boutina and the municipality.

The effects of the mandate (save for the fees payable to Silinda in
terms of the service level agreement) accrued to the department,

Boutina and the municipality - so did their obligations remain their
own and not only that of Silinda.
[8]
[27]
The fact that the MEC paid the purchase price to Silinda matters not
because
the
department had to effect payment to Boutina through Silinda who held
the mandate to receive the money and pay same to Boutina
on
registration of transfer. The payment did not reach Boutina because
Silinda, who was the department’s agent, misappropriated
the
money. The department has as a result not complied with its
obligation to pay Boutina in terms of the deed of sale despite
paying
the purchase price over to Silinda. The department remains indebted
to Boutina.
[28]
Silinda, having misappropriated the money that was due to Boutina is
indebted to Boutina.
Silinda has not opposed this application.
Boutina is entitled to judgment in its favour against Silinda.
[29]
Even if the department is ordered to pay Boutina, the department is
not left without recourse.
It has already begun to claim the purchase
price from Silinda and Mr. Silinda which action is not defended.
COSTS
[30]
There is no reason why the costs should not follow the result.
[31]
In the premises, I made the following order:
(a)
The first and second respondents are ordered to pay the applicant an
amount of R 16 000
000 jointly and severally, the one paying the
other to be absolved.
(b)
Interest on the amont in paragraph 1 above at a rate of 7% per annum
calculated from 21
May 2021 until date of payment.
(c)
The first and second respondents are ordered to pay the applicant’s
costs jointly
and severally, the one paying the other to be absolved.
Roelofse
AJ
Acting
Judge of the High Court
DATE
OF HEARING:

6 October 2022
DATE
OF JUDGMENT:

13 October 2022
This
judgment will be delivered by dispatching same by email to the
parties on 13 October 2022. In addition, the judgment will be
sent to
SAFLII for publication on its website. The judgment shall be deemed
to have been delivered at 09:00 on 13 October 2022.
APPEARANCES
FOR
THE APPLICANT:
Adv
CFJ Brand SC on instructions of Slabber Attorneys Inc.
FOR
THE FIRST RESPONDENT
Adv
M Makoti on instructions of NG Dlamini Attorneys
[1]
Clause 3.1 of the service level agreement.
[2]
Clause 3.5 of the service level agreement.
[3]
Clause 4.1 of the service level agreement.
[4]
Clause 6.1 of the service level agreement.
[5]
Clause 6.3 of the service level agreement.
[6]
A director of Boutina and the deponent to the founding affidavit.
[7]
See: LAWSA, Mandate and Negotiorum Gestio (Volume 28(1) - Third
Edition), paragraph 55.
[8]
See: Ncqula v Muller’s Book Shop
1960 4 All SA 218
(E);
1963 4
SA 802
(E)

Back to Law Reports