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[2018] ZAGPJHC 645
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PG Sharedealing (Pty) Ltd v First Realty Randburg (Pty) Ltd t/a Chas Everitt International Property Group (A5058/2017) [2018] ZAGPJHC 645 (3 December 2018)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION (JOHANNESBURG)
CASE
NO: A5058/2017
3/12/2018
Not
reportable
Not
of interest to other judges
Revised.
In
the matter between:
PG
SHAREDEALING (PTY)
LTD Appellant
and
FIRST
REALTY RANDBURG (PTY)
LTD
Respondent
t/a
CHAS EVERITT INTERNATIONAL PROPERTY
GROUP
JUDGMENT
WANLESS
AJ:
[1]
This is an appeal by PG Sharedealing (Pty) Limited (hereafter
referred to as “the Appellant”) against the
whole
of the judgment granted by Moshidi J, in this Court, on the 29
th
of September 2016.The aforesaid judgment arose pursuant to an opposed
application in terms of which First Realty Randburg (Pty)
Limited,
trading as Chas Everitt International Property Group (hereafter
referred to as “the Respondent”),claimed from
the
Appellant payment of estate agent’s commission in terms of a
mandate given by the Appellant to the Respondent to bring
about the
sale of an immovable property owned by the Appellant.
[1]
This mandate was contained in a written agreement of purchase
and sale (hereafter referred to as “the agreement”),
entered into between the Appellant (as the seller) and the
“Anderson’s” (as the buyer). Both Brian Peter
Anderson
and Nicola Anderson had been cited as Respondents in the
application since they had an interest in the outcome thereof but the
Respondent sought no relief against either of them. In the premises,
neither of them are parties to this appeal.
[2]
The court
a
quo
found in favour of the Respondent and ordered the Appellant to pay to
the Respondent the sum of R 299 250.00 (inclusive of
VAT);
interest thereon at the applicable interest rate from the date of
summons to date of full payment and costs of the application
on the
scale as between attorney and client.
[2]
Leave to appeal was refused by the court a quo on the 21
st
of June 2017
[3]
. Thereafter, the
Appellant petioned the Supreme Court of Appeal which, on the 6
th
of September 2017, granted the Appellant leave to institute this
appeal before the full bench of this Court.
[4]
[3]
In the first instance the Appellant relies on the non-fulfilment of a
suspensive condition contained in the agreement as to
why it cannot
be liable to pay any commission to the Respondent.
[5]
In addition thereto, it was submitted on behalf of the Appellant in
this court, that the court
a
quo
erred by affording weight to conduct after the lapsing of the
agreement which conduct could not, as either a matter of fact
or a
matter of law, constitute either a valid waiver of the suspensive
condition or reinstatement of the agreement.
[6]
[4]
The Appellant also averred that the court
a
quo
erred
in affording weight to the provision in the agreement which gave the
Appellant a discretion to extend the period for the fulfilment
of the
suspensive condition by a further ten days.
[7]
Finally, the Appellant relied on the submission that the entire
judgment of the court
a
quo
was, in effect, unsustainable, in light of the fact that the
Respondent had failed to prove due compliance with the provisions
of
Section 34A(1)(b) of the Estate Agency Affairs Act 112 of 1976
(hereafter referred to as “the Act”).
[8]
[5]
The Respondent’s right to claim payment of commission to it by
the Appellant must be determined in accordance with the
mandate
granted to the Respondent by the Appellant as contained in the
agreement and read with the applicable terms of that agreement.
In
this regard the following clauses of the agreement are relevant for
the purposes of deciding whether or not, on the application
papers
before the court
a quo
, the learned Judge in the court
a
quo
was correct in holding that the Respondent had lawfully
earned the commission payable to it, by the Appellant, in terms of
that
agreement.
[6]
Clause 8 of the agreement
[9]
deals specifically with “AGENTS COMMISSION” and reads as
follows:-
“
a) The
Seller
shall pay the Agent commission equal to 7.5% of the purchase
price, plus VAT on such commission.
b) Agent’s
commission is earned and payable on transfer of the Property into the
name of the Purchaser
or
upon cancellation of this agreement
for any reason whatsoever (including any mutual cancellation)………
c)……………………………..
d)……………………………….
e)……………………………….
f)…………………………………
g) The provisions of
this clause are intended as a contract for the benefit of the Agent
and may be enforced by the Agent, who accepts
the benefits conferred
upon it in terms thereof.
h) The Purchaser and the
Seller hereby warrant that the Agent is the sole and effective cause
of the sale and
*(i) the Purchaser
warrants to the Seller that he was not introduced to the Property or
the Seller by any other person other than
the Agent;”
[7]
Together with the aforegoing clause of the agreement, it is necessary
to consider the provisions of clause 2 of the agreement.
[10]
Clause 2 deals with “BOND FINANCE” and the relevant
provisions thereof are the following:-
“
2.1 This offer is
subject to the
suspensive condition
that the Purchaser (or the
Seller or the Agent on the Purchaser’s behalf) is able to raise
a loan upon the security of a
mortgage bond to be passed over the
Property by a bank or other financial institution for the sum of not
less than Three Million
Rand R3,000,000-00 within 30 days of
acceptance of this agreement,
(which time may
be extended
by the Agent at the Agent’s sole discretion for a further
period
not exceeding 10 days).The parties hereto specifically
agree that such extension will be of full force and effect and
binding on
both the Purchaser and the Seller irrespective of whether
such extension is communicated to either the Purchaser or the Seller.
”
[8]
Within this contractual context, it then becomes necessary to
consider those facts which are common cause in this matter. These
may
be summarised as follows:-
1. The agreement was
entered into on the 30
th
of June 2015 when the offer to purchase the property, made by the
Purchaser (the “Anderson’s”), was accepted
by the
Appellant;
[11]
2. The Respondent, as a
party to the agreement, accepted the benefits in favour of and
accruing to the Respondent in terms thereof.
[12]
3. The date by
which the suspensive condition had to be fulfilled in terms of clause
2.1 of the agreement was the 30
th
of July 2015.
4. There is no evidence
that the Purchaser was able to raise a loan as contemplated by clause
2.1 of the agreement on or before
that date. In the premises, the
suspensive condition was not fulfilled and,
prima
facie,
the
sale was “cancelled and the agreement of no further force or
effect”.
[13]
5. On the 3
rd
of August 2015, one Morrow, an employee of Mercantile Bank contacted
one Visser, a conveyancing secretary employed at the firm
of
attorneys appointed in terms of the agreement to effect the transfer
of the property, namely Gert Venter Attorneys and informed
Visser
that a mortgage bond had been granted in favour of the Purchaser.
[14]
6. That same day (the 3
rd
of August 2015) Visser sent an email to Morrow confirming the
contents of the aforesaid telephone call and requesting the name
and
contact details of the attorneys who would be instructed to attend to
the mortgage bond on behalf of the Purchaser.
[15]
7. On the 4
th
of August 2015, Gert Venter Attorneys received an email from Morrow
on behalf of Mercantile Bank advising that Savage, Jooste and
Adams
Attorneys would be attending to the registration of the aforesaid
mortgage bond over the property and that one Marleen Greese
would be
in contact with Gert Venter Attorneys shortly, pertaining to
same.
[16]
8. During or about the
period 22 August 2015 to 31 March 2016, certain correspondence was
entered into and a telephone conversation
took place, between
representatives of Gert Venter Attorneys; Savage, Jooste and Adams
Attorneys and Mercantile Bank. This correspondence
and at least one
telephone conversation all pertained to the registration of the
mortgage bond over the property.
[17]
9. On the 4
th
of September 2015, one Gert Venter, a representative of the
Appellant, addressed a letter on behalf of the Appellant to the
Purchaser
(the Anderson’s).In this letter the Appellant advises
that,
inter
alia
,
should the agreement be cancelled by mutual consent the Appellant
would be liable to pay the Respondent’s commission and
any
wasted costs incurred by the Purchaser in respect of the attorneys
who were registering the mortgage bond.
[18]
10. On the 1
st
of October 2015 the Appellant and the Purchaser entered into a
written “CANCELLATION OF SALE AGREEMENT” in terms of
which,
inter
alia
,
the agreement was cancelled and the Appellant indemnified the
Purchaser in respect of any claim for commission by the
Respondent.
[19]
[9]
Against these facts, it is the Appellant’s case, before this
Court, that once the period of 30 days expired on the 30
th
of July 2015 the non-fulfilment of the suspensive condition resulted
in the agreement being of no further force and effect. In
amplification of this argument the Appellant relies on the fact that
the agreement makes no provision for a scenario where it may
be
agreed (presumably between the parties) that non-fulfilment of the
suspensive condition would not render the agreement void
ab
initio
and,
further, that the contract specifically provides that in the event of
non-fulfilment of the suspensive condition the agreement
will no
longer be of any force or effect.
[20]
[10]
The former submission, whilst technically correct, takes the present
matter no further and, unless it was made to somehow place
emphasis
on the latter, may safely be ignored. Having regard to the latter, it
is patently clear that the agreement provides for
the case where the
suspensive condition is not fulfilled and places beyond doubt that in
the event of such non-fulfilment the agreement
would no longer be of
any force or effect. Following the argument as postulated on behalf
of the Appellant, this being the case
and there being no valid
agreement of sale in existence, there would be no grounds upon which
the Respondent would be entitled
to claim payment of commission which
could only be earned in terms of that agreement.
[11]
These submissions, viewed in isolation, would, undeniably, carry some
weight. However, when viewed in the context of the agreement,
together with the facts which are common cause, they carry very
little weight, if any weight at all. This is in light of the clear
and unambiguous provisions of the agreement as set out in clause 2.1
thereof.
[21]
Clearly,
the provisions of this clause, with particular reference to the
provision that the Appellant could, at its sole
discretion, extend
the period for the fulfilment of the suspensive condition for a
further period not exceeding 10 days, which
extension would be of
full force and effect and binding on both the Purchaser and the
Seller irrespective if same was not communicated
to either of the
said parties, constitutes a
stipulatio
alteri
in the truest sense, being a benefit to the Respondent (or third
party).
[12]
Following thereon, it was incumbent upon the Respondent, having
elected to institute its claim for the payment of commission
by way
of application proceedings, to show not only that it had accepted the
benefit in terms of the agreement but that it had
exercised its
discretion to extend the requisite period by a further 10 days and
that the suspensive condition had been fulfilled
within this extended
period. It is important to note that the point taken on appeal by the
Appellant that the Respondent had waived
the right to rely on this
benefit was not pursued by Counsel on behalf of the Appellant who
conceded, quite correctly, that there
were no grounds therefor.
[13]
Acceptance by a third party may be express or implied and, where the
contract is a beneficial one, strong evidence will not
be required to
support it.
[22]
If, in a
contract for sale of land, a clause providing for payment of the
estate agent’s commission is analysed as a contract
for the
benefit of the estate agent, he may accept that benefit at the outset
by presenting the contract for signature.
[23]
[14]
As set out earlier in this judgment the agreement clearly provides
for a benefit to the Respondent by giving it a
sole
discretion
to extend the period for a further 10 days, thereby increasing the
opportunity to satisfy the requirements of the suspensive
condition.
This, in turn, gives rise to a valid agreement in terms of which it
is entitled to receive commission (it being clear
that the Respondent
would
not
be entitled to payment of commission in the event of non-fulfilment
of the suspensive condition and the agreement being automatically
cancelled and of no force or effect in terms of clause 2.2 of the
agreement). The commission becomes payable when the property
is
transferred into the name of the Purchaser
or
upon cancellation of the agreement for any reason whatsoever
(including any mutual cancellation) in terms of clause 8(b) of the
agreement.
[24]
[15]
There can be no doubt that the aforesaid benefit extended to the
Respondent in terms of the agreement was accepted by it. This
is so,
since not only did the agreement “presented” to both the
Purchaser and the Seller for signature include the
benefit as set out
therein but it was also accepted on behalf of the Respondent who was
a party thereto (the agreement being signed
on behalf of the
Respondent).
[25]
Indeed, this
Court did not understand it to be part of the Appellant’s case
that the
stipulatio
alteri,
as
contained in the agreement, had not been accepted by the Respondent.
This was never disputed in the court
a
quo.
[16]
Having satisfied the requirement of proving that it had accepted the
benefit in terms of the agreement it is now necessary
to consider
whether the Respondent had shown that it had exercised its discretion
to extend the requisite period by a further 10
days and that the
suspensive condition had been fulfilled within this extended period.
[17]
On this point the Appellant submits that the agreement did not
provide for an “automatic extension” but provided
for the
exercise of “a contractual discretion”. In this regard,
it was submitted, on behalf of the Appellant, that
there was no
evidence that the Respondent had exercised such a discretion at all.
No mention of any extension of the relevant period
was made in the
Founding Affidavit. Further, it was submitted that in sub-paragraph
9.2 of its Replying Affidavit the Respondent
(as the holder of the
discretion) had wrongly stated that the practical effect of the
clause which created this discretion was
that the 30 days were
automatically
extended
to 40 days.
[26]
So, argues the
Appellant, this attitude demonstrates that the Respondent did not
exercise the requisite discretion.
[18]
It is fairly trite that the rule in application proceedings is that
the necessary allegations upon which an applicant relies
must appear
in the founding affidavit, as the applicant will generally not be
allowed to supplement the founding affidavit by adducing
supporting
facts in a replying affidavit.
[27]
This is, however, not an absolute rule for the court has a discretion
to allow new matter in a replying affidavit, giving the respondent
the opportunity to deal with it in a second set of answering
affidavits.
[28]
Thus, a
distinction must be drawn between a case in which the new material is
first brought to light by the applicant who knew
of it at the time
when his founding affidavit was prepared and a case in which facts
alleged in the respondent’s answering
affidavit reveal the
existence, or possible existence, of a further ground for relief
sought by the applicant. In the latter type
of case the court would
obviously more readily allow an applicant in his replying affidavit
to utilise and enlarge upon what has
been revealed by the respondent
and to set up such additional ground for relief as might arise
therefrom.
[29]
[19]
It is true that in its founding affidavit the Respondent did not
specifically deal with and rely upon, clause 2.1 of the agreement.
Rather, what the Respondent did in its concise founding affidavit of
some 9 pages, is to set out its cause of action and, where
relevant
thereto, attach certain documentation as annexures in support
thereof. In so doing the Respondent put up the entire agreement
as an
annexure which, obviously, contained clause 2.1.
[30]
Furthermore, in setting out its cause of action, it referred
specifically to the agreement, upon which its cause of action was
primarily based, together with the relevant clauses thereof.
[31]
It is further clearly stated that the Purchasers complied with all of
their obligations in terms of the agreement.
[32]
.
[20]
In the premises, in the first instance, the Respondent has fully
complied with the “criteria” as set out,
inter alia
,
in the matter of
Reynolds NO v Mecklenberg (Pty) Limited
1996
(1) SA 75
(WLD) at 781, that the facts must be set out simply,
clearly and in chronological sequence and without argumentative
matter, in
the affidavits which are filed in support of the notice of
motion. Secondly, it is clear from the aforegoing that this is not a
case where the Respondent is seeking to bring to light new matter for
the first time in its replying affidavit. Rather, the provisions
of
clause 2.1 of the agreement, having been pertinently raised by the
Appellant in its answering affidavit and relied upon in its
defence
to the Respondent’s claim for commission, correctly elicited a
reply from the Respondent in its replying affidavit.
Insofar as this
is a matter where facts alleged in the Appellant’s answering
affidavit reveal the existence, or possible
existence, of a further
ground for relief sought by the Respondent there can be no complaint
on behalf of the Appellant that the
Respondent should be entitled to
utilise and enlarge upon what was revealed by the Appellant in its
answering affidavit and to
set up such additional grounds for relief
as might arise therefrom. Certainly, there was no substantive
objection thereto on behalf
of the Appellant, accompanied by an
application to serve and file a further set of answering affidavits
dealing more fully with
this aspect as raised by it in its “opposing
affidavit” in the court
a quo
.
[21]
Returning to the Appellant’s other criticism of the
Respondent’s reply to the issue as to whether the Respondent
had exercised its discretion at all in terms of clause 2.1 of the
agreement, it is clear, upon a proper reading of sub-paragraph
9.2 of
the Respondent’s replying affidavit that what is stated therein
cannot be said to be interpreted as to the Respondent
averring, or
attempting to rely upon, the said clause providing an automatic
extension of the relevant period. Rather, in this
sub-paragraph the
deponent to the Respondent’s replying affidavit, with reference
to clause 2.1 of the agreement, simply
states, firstly, “that
the purchaser’s 30-day period to obtain a loan can be extended
by a further period of 10 days
at the Agent’s sole and absolute
discretion irrespective of whether such extension is communicated to
either the purchasers
or the First Respondent.” Secondly, it is
stated that “The practical effect of this clause is that the
purchasers had
40 days to obtain a loan, which period would only have
expired on 10 August 2016.” It is clear therefrom that a
distinction
is drawn in this sub-paragraph between the discretion
given to the Agent in terms of the agreement and the practical effect
thereof.
Moreover, it is clear that it was intended to deal with the
practical effect of the Respondent in this matter having exercised
its discretion to extend the relevant period to a date which
resulted, on the Respondent’s version, in the fulfilment of the
suspensive condition. Finally, the sub-paragraph in question does not
use the word “automatic”. Under the circumstances,
it
would not be proper (in addition to the reasons set out above) to
impute such an interpretation to the contents of this sub-paragraph
of the Respondent’s replying affidavit.
[22]
It is however true that in its replying affidavit, having
specifically raised the fact that the agreement makes provision for
the extension of the period within which the suspensive condition is
to be fulfilled to be at the sole discretion of the Respondent
(as
set out above)
[33]
the
Respondent, in that replying affidavit, makes no specific averment or
averments that the Respondent exercised that discretion.
Rather, the
Respondent relies on the events which took place on the 3
rd
and 4
th
of August 2015.
[34]
It is also
true that the Respondent appears to rely on events which transpired
after the extended period.
[35]
However, since, on an ordinary grammatical interpretation of clause
2.1 of the agreement, it is clear that the discretion vested
upon the
Respondent in terms thereof must be exercised within 10 days of the
expiry of the 30 day period, as set out therein, little
or no
cognisance should be taken thereof. Likewise, the failure of the
Appellant to avail itself of the provisions of the “breach
clause”
[36]
(an argument
put forward on behalf of the respondent in support of its claim), as
set out in the agreement, does not have any bearing
on the issue at
hand.
[23]
The court
a
quo,
in
accepting that it was never in dispute on the application papers
before it that the Purchaser had obtained the required loan
from
Mercantile Bank, which fact was communicated to the Appellant on the
3
rd
and 4
th
of August 2015 and rejecting the Appellant’s version that only
upon receiving the bond confirmation from Mercantile Bank
did the
Appellant thereafter react to ascertain whether there had been
compliance with the suspensive condition, as being fabricated
and
incorrect, came to the finding that the suspensive condition in the
agreement had been fulfilled.
[37]
The reasons therefor and upon which the court
a
quo
based
its judgment in this regard are not only sound in law but accord with
the facts which the learned Judge in the court
a
quo
was entitled to accept on the application papers before him. There
was no evidence whatsoever before the court
a
quo
that would have raised any doubt as to whether the Respondent
exercised the discretion available to it to extend the period in
which the suspensive condition was to be fulfilled by a further 10
days and, certainly, until after the 4
th
of August 2015.
[24]
The suspensive condition having been fulfilled the Respondent would
be entitled to receive payment of commission, in terms
of the
agreement, either upon the registration of the transfer of the
property or upon cancellation of the agreement.
[38]
In the premises, the Respondent became entitled to receive payment of
the commission when the agreement was cancelled on
the 1
st
of October 2015 by the Appellant and the Purchaser entering into a
written “CANCELLATION OF SALE AGREEMENT” in terms
of
which,
inter
alia
,
the agreement was cancelled and the Appellant indemnified the
Purchaser in respect of any claim for commission by the
Respondent.
[39]
[25]
Of course, the liability of the Appellant to pay the said commission
to the Respondent is dependent upon whether or not the
Respondent
had complied with all relevant statutory provisions, with
particular reference to section 34A(1)(b) of the Act.
This issue was
raised by the Appellant by virtue of a bare denial in its “opposing”
affidavit to the averments contained
in paragraph 6 of the founding
affidavit to the effect that the Respondent “…is an
estate agent who, at all relevant
times, was the holder of a valid
fidelity fund certificate issued to it in terms of section 26(a) of
Act 112 of 1976 and who has
fidelity insurance in terms of section
26(b) of Act 112 of 1976.”
[40]
In response thereto the Respondent attached, as annexures to
its replying affidavit, copies of Fidelity Fund Certificates
for the
years 2015 and 2016.
[41]
These
periods would obviously cover those when the agreement was entered
into and when the agreement was cancelled. Both of the
aforesaid
certificates, issued by the Estate Agency Affairs Board”
reflect the following:-
“
This is to
certify that subject to the provisions of act 112 of 1976 the entity
whose name appears on this certificate has complied
with the
provisions of section 16 of act 112 of 1976 and the regulations
promulgated in terms of the said section. “
The
name which appears on both certificates is that of the Respondent,
namely “FIRST REALTY (RANDBURG) (PTY) LTD”.
[26]
In its application for leave to appeal to this court
[42]
it was stated that:-
“
The judgment is
contrary to section 34A(1)(b) of the Estate Agency Affairs Act 112 of
1976 in that the applicant
is a company
and there is no
evidence that a valid fidelity fund certificate has been issued to
every
director
of the applicant company.”
Having
been granted leave to appeal to this court by the Supreme Court of
Appeal the Appellant, in repeating verbatim the above
as a ground of
appeal, went on to state:-
[43]
“
The correct
outcome in this regard should have been that, in the absence of proof
that a valid fidelity fund certificate has been
issued to every
director,
the application is dismissed with costs.”
In
the Heads of Argument served and filed by the Appellant’s
erstwhile Counsel the same ground was put forward as to why the
judgment of the court
a quo
should be set aside. Paragraph 21
of those Heads of Argument reads as follows:-
“
No fidelity fund
certificates of the
director/s
of the applicant is before
court.
Applicant
as a result thereof is not entitled to
payment of any commission. “
However,
when this matter came before this court on appeal, Counsel for the
Appellant, De Koning SC, sought to expand the Appellant’s
argument in this regard by submitting that it was incumbent for the
Respondent to have placed before the court
a quo
proof that,
in addition to the fact that every director of the Respondent had
been issued with a Fidelity Fund Certificate that
every employee of
the Respondent company had as well. In this regard, he seemed to
focus upon the fact that the identity of the
person representing the
Respondent when the agreement was entered into had not been disclosed
by the Respondent in its affidavits
which, in turn, gave rise to the
fact that no certificate issued in the name of that person formed
part of the application papers
before the court
a quo.
In
passing, Counsel for the Appellant sought to criticise the Respondent
for this lack of particularity in both the founding and
replying
affidavits.
Of
course, it is open to the Appellant to rely on this additional
argument on appeal and the Appellant is not confined to the grounds
as set out in the documents referred to above.
[44]
[27]
The first fact worthy of note is that the commission payable in terms
of the agreement is payable to the Respondent company
(FIRST REALTY
(RANDBURG) (PTY) LTD) and not to any individual or employee of the
Respondent.
[45]
Secondly, the
preamble to the Act, reads as follows:-
“
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.”
As
held by the Supreme Court of Appeal in the matter of
Brodsky
Trading 224 CC v Cronimet Chrome Mining SA (Pty) Ltd and Others
(39/2016)
[2016] ZASCA 175
(25 November 2016) at paragraph [15]
of the judgment the general object of the Act was described by that
court in the matter of
Rogut v Rogut
1982 (3) SA 928
(AD) at
939C in the following terms:-
“
The general
object of the Act was to protect the public against some persons by
requiring all estate agents,
as defined
, to take out a
fidelity fund guarantee (which is not granted automatically); and to
pay the levies and contributions; and by requiring
all estate agents
to keep necessary accounting records and to cause them to be audited
by an auditor, and by obliging every estate
agent to open and keep a
separate trust account with a bank and forthwith to deposit therein
the moneys held or received by him
on account of any person.”
Further,
in paragraph [16] of that judgment, it was held:-
“
The objectives of
the Act with regard to the issue and validity of certificates are
encapsulated in several of its provisions, namely
ss 1,16,26 and 34A
which, in their relevant parts, provide as follows:
“
Section
1
“
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. .
.
(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 34A 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.
16 Applications for
and issue of fidelity fund certificates and registration
certificates.
(1)
Every estate agent or prospective estate agent, excluding an estate
agent referred to in paragraph (cA) of the definition of
“estate
agent” in section 1, shall, within the prescribed period and in
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.
(4)
No fidelity fund certificate or registration certificate shall be
issued unless and until the provisions of this Act are complied
with,
and any fidelity fund certificate and registration certificate issued
in contravention of the provisions of this Act shall
be invalid and
shall be returned to the board at its request.
26. 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 the corporation.
34A. 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. “
In
paragraph [17] of
Brodsky (supra)
the Supreme Court of Appeal
held the following:-
“
[17] A company or
a close corporation may accordingly fall within the definition of an
“estate agent” in terms of s
1(a) read with ss 1(b) and
(c). In addition, a clear distinction is drawn in ss 26 and 34A
between companies and close corporations
that are estate agents and
the requirement that directors of companies and members of close
corporations, be in possession of valid
certificates.”
It
is common cause in this matter that the Respondent is an estate agent
as defined in,
inter alia
, s 1(a) read with ss 1(b) and (c) of
the Act. As such and in terms of ss 26 and 34A of the Act the
Respondent, as a company, will
not be entitled to commission in the
event of a valid fidelity fund certificate not having been issued to
every director of the
Respondent. There being a clear distinction
(for obvious reasons) between a company which carries on business as
an estate agent
and a natural person or persons carrying on business
as such, there is clearly no requirement in the Act that every
employee of
the Respondent company be issued with the requisite
certificate. It follows therefrom that the Respondent will be
entitled to earn
commission without showing that the person who
entered into the agreement on behalf of the Respondent had, at that
time, been issued
with same. This disposes of the “additional”
argument placed before this court on behalf of the Appellant during
the
hearing of the appeal and as set out above.
[28]
Turning to the question as to whether the failure of the Respondent
to place before the court
a
quo
fidelity fund certificates for every one of its directors
disqualifies the Respondent from receiving payment from the Appellant
of commission in terms of the agreement, it has long been part of our
law that a thing done contrary to the direct prohibition
of the law
is void and of no effect.
[46]
[29]
However, this does not mean that our courts must slavishly (and
narrowly) apply the provisions of a statute without having
regard to,
inter alia
, the nature and purpose of the statute itself and
the effect of a strict or literal interpretation of the provisions
thereof. In
the matter of
Sutter v Scheepers
1932 AD 165
,
Wessels JA, at page 174, held that a court should consider the
objects and scope of a statutory provision and if its terms were
strictly carried out, this would lead to injustice, then that
provision should be interpreted as being directory rather than
peremptory.
Further, in the matter of
Pottie v Kotze
1954 (3)
SA 719
(AD) at 727B-C, Fagan JA, dealing with a Transvaal Ordinance
which forbade the sale of a motor vehicle without a valid roadworthy
certificate, referred to “serious inequities [that] might be
caused”, by the invalidation of the contract and declined
to
vitiate the agreement in question.
[30]
Further, in the matter of
Swart v Smuts
1971 (1) SA 819
(AD),
Corbett JA held (at 829E-F) that when the statutory provision in
question does not itself expressly provide that a transaction
is null
and void and of no force and effect, the validity thereof depends, in
the last resort, on the intention of the legislature.
In this matter
the court held that a deed of sale in conflict with the provisions of
s 23(1)(b) of the Agricultural Credit Act
28 of 1966 was not invalid
because it did not have a certificate that there was a reasonable
prospect that the Land Bank would
grant the buyer credit.
[31]
The full bench of the erstwhile Transvaal Provincial Division, in the
matter of
Noragent (Edms) Bpk v De Wet
1985 (1) SA 267
(TPD),
referred to
Swart v Smuts (supra)
and held that an agreement
between an estate agent and an owner of land was not invalid merely
by reason of the fact that the estate
agent had failed to comply with
the provisions of s 26 of the Estate Agents Act 112 of 1976.
[32]
The aforesaid decision was approved in the matter of
Taljaard v TL
Botha Properties
[2008] ZASCA 38
;
2008 (6) SA 207
(SCA) where the court dealt with
a similar matter. In paragraph [8] of the judgment, Nugent JA held
that “it is well established
that legislation is to be
construed so as to interfere as little as possible with established
rights”.
[33]
As noted by Willis AJA in the matter of
Hubbard v Cool Ideas 1186
CC
2013
(5) SA 112
(SCA), at paragraph [43], one of the “tools”
in the interpretation of statutes, as decided in the matter of
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA
593
(SCA), is to look at the purpose to which the section is
directed. Finally, as also noted by the learned Judge, in the same
paragraph,
it has been held by the Constitutional Court, in the
matter of
National Credit Regulator v Opperman and Others
2013
(2) SA 1
(CC) that our courts should avoid “legislative
sledgehammers”.
[34]
From the preamble of the Act and the provisions contained therein, it
is clear that the purpose thereof and the intent of the
legislature
in promulgating same, was to control certain activities of estate
agents in the public interest. Most importantly,
it is clear that the
Act is there to create a fund (the fidelity fund) from which any
claims made by members of the public against
registered estate agents
may be paid. In order to raise monies for this fund, it is a criteria
that a fidelity fund certificate
will not be issued to an estate
agent, as defined in the Act, unless that estate agent has,
inter
alia
, complied with the requirements as set out in the Act which
includes making payment of a stipulated amount into the fund. In this
manner, not only does the Estate Agency Affairs Board obtain a record
of and have control over, all estate agents as defined in
the Act but
this also means that the fidelity fund receives contributions from
those estate agents. In order to enforce the registration
of all
estate agents with the board the Act contains certain “penalty”
provisions. For present purposes the relevant
sections are s 26 which
prohibits the rendering of the services of an estate agent under
certain circumstances and s 34A where
an estate agent is not entitled
to remuneration in certain circumstances. Both sections require that
the estate agent be in possession
of a valid fidelity fund
certificate at the relevant time and that where the estate agent is a
company, every director of that
company also be in possession of a
valid fidelity fund certificate.
[35]
As noted earlier in this judgment, the averment on behalf of the
Respondent in the founding affidavit that the Respondent is
an estate
agent who, at all relevant times, was the holder of a valid Fidelity
fund certificate issued to it in terms of s 26(a)
of the Act was met
with a bald denial by the Appellant in its answering affidavit.
[47]
In its replying affidavit the Respondent put up the fidelity fund
certificates for the Respondent for the years 2015 and 2016.
[48]
It did not place before the court
a
quo
certificates
in respect of any of its directors. The Appellant never sought to
take this issue any further by seeking leave from
the court
a
quo
to
serve and file a supplementary affidavit dealing specifically
therewith.
[36]
Further, as set out earlier herein, on the face of both certificates
is the following certification, namely:-
“
This is to certify
that subject to the provisions of act 112 of 1976 the
entity
whose
name appears on this certificate has complied with the provisions of
section 16 of act 112 of 1976 and the regulations promulgated
in
terms of the said section.”
Section
16 of the Act has been fully set out earlier in this judgment and
will not be repeated herein. What is clear from the aforegoing
is
that the Respondent, having been issued with the said certificates,
had, in compliance with ss 9(1) and 15 of the Act,
inter alia
,
paid all prescribed levies to the board and annual contribution to
the fund, which had to be paid by estate agents. In the premises,
the
underlying purpose of requiring an estate agent to make payment of
such levies and contributions (as dealt with above) before
an entity
could be registered as an estate agent and be issued with a fidelity
fund certificate, had been fulfilled. On that basis,
it would have to
be accepted that the Respondent was entitled to render the services
of an estate agent (s 26 of the Act) and receive
remuneration
therefor (s 34A of the Act).
[37]
No reference is made on either of the aforesaid certificates in this
matter as to whether or not fidelity certificates had
been issued to
every director of the Respondent. Further, this issue was never one
which was pertinently raised in the application
papers before the
court
a quo.
In the event that every director of the
Respondent had not been issued with a certificate at the relevant
time it would appear that,
by virtue of the fact that the Respondent
had been issued with such a certificate, the Respondent had complied
substantially with
s 16 of the Act. In this regard, it is improbable
that the board, when issuing the Respondent, a company, with a
certificate (which,
upon a literal interpretation of the relevant
sections of the Act is not necessary), would not have done so if it
had not also
issued certificates to every director of the company. On
the other hand, if certificates were not issued to every director but
only to the Respondent, it may well be the practice of the board, as
a matter of convenience, to issue one certificate to the entity
rather than to every director thereof. This is quite likely having
regard to,
inter alia
, the fact that (as set out above) the
Respondent had paid all levies and contributions; the board was
satisfied that the Respondent
could render the services of an estate
agent and receive remuneration in respect thereof, together with the
fact that the issue
of a single certificate to a company, rather than
to every director, lessened the administrative duties of the board,
particularly
since there could well be a change of directors during
the period for which a certificate is issued.
[38]
The Respondent was the entity identified in the agreement as the
entity who was entitled to estate agent’s commission.
It was
never contemplated by any of the parties to the agreement that the
Respondent would not be entitled to receive that commission
on the
basis that the Respondent had a valid fidelity fund certificate
issued to it by the board in terms of the Act following
compliance by
it of all of the relevant provisions of the Act but may not be in
possession of such certificates for every director.
Further, it had
never been a real issue on the application papers before the court
a
quo
, that the Respondent had been the effective cause of the sale
and (apart from the defence that the suspensive condition had not
been fulfilled) was therefore entitled, in terms of the agreement, to
be paid the estate agent’s commission.
[39]
Taking all of the aforegoing into account, s 34A of the Act should be
construed, as far as possible, not to interfere with
the Respondent’s
established rights. These rights are in terms of both the Act and the
agreement. In the premises, I find
that the appeal should be
dismissed, with costs.
[40]
Both s 26 and s 34A of the Act have been subjected to amendments
since the commencement of the Act and/or pursuant to their
introduction into the Act. It would appear that these amendments have
arisen as a result of the Legislature deeming it necessary
to meet
changes in the “property industry”, with particular
reference to services rendered by estate agents and/or
as a result of
judicial pronouncements in relation thereto. It would appear that the
time may well have come for the legislature
to, once again, direct
its attention to both of these sections of the Act. I say this
because, in the first instance, there can
be little purpose served
(particularly when one has regard to the intention and purpose of the
Act) by making it a requirement
for a company or close corporation to
apply to the board for a fidelity fund certificate in respect of
every director or member.
If the company or close corporation is
required to register as an estate agent and apply for a fidelity fund
certificate (which
clearly took place in the present matter) then
there is no advantage to members of public if the Act further
requires every director
or member to also apply for and be issued
with, such a certificate. Not only does this simply add an extra
burden on the board
when carrying out its administrative duties but
it serves no real purpose. The levies and contributions would have
been paid by
the company or corporation, thereby satisfying the
purpose of the Act. Further, if a company or corporation did not have
a fidelity
fund certificate, it would, in the normal course, be
unable to render the services of an estate agent and would not be
entitled
to be remunerated in respect thereof. Secondly, whilst
directors and members may come and go, an entity, created for the
purpose
of carrying on the business of an estate agent, would remain
until it no longer carried on that business or was deregistered so
that it ceased to exist. At the same time, amendments to the Act
whereby the entity rather than the directors or members is required
to comply with the provisions of the Act would not only provide
certainty as to whether or not that entity could render the services
of an estate agent and be remunerated in respect thereof but would
also avoid any of the parties to an agreement involving the
payment
of estate agent’s commission attempting to avoid the payment
thereof by relying on the failure (administrative or
otherwise) of an
entity to ensure, at all times, that its directors or members (who
could be numerous and who could be scattered
around the world or
country) had each been issued with fidelity fund certificates by an
administrative body such as the board.
Of course, the requirement
that an entity must apply for a fidelity fund certificate remaining a
provision of the Act would satisfy
the intention and purpose of the
Act, in that an entity who wishes to carry on the business of an
estate agent would have to pay
the levies and contributions in terms
of the Act and members of the public would continue to receive the
protection in respect
of that entity as afforded by the Act.
[41]
The Respondent has asked that the Appellant be ordered to pay the
costs of this appeal on a punitive scale. In this regard,
it was
submitted that the Appellant had raised spurious defences to the
Respondent’s claim. Further, the fact that the court
a
quo
had
ordered the Appellant to pay the costs of the application and the
application for leave to appeal (which was refused) on the
scale of
attorney and client, was relied upon as another reason why this
court, in the exercise of its discretion, should follow
that trend
and once again punish the Appellant with a punitive costs order. In
the first instance, it cannot be said that the defences
raised were
spurious, certainly not to the extent that they would deserve special
sancture by way of a punitive costs order. Secondly,
it is common
cause that the Supreme Court of Appeal granted the Appellant leave to
appeal to this court. By doing so the learned
Judges of that court
held that there was a reasonable possibility that this court could
come to a different decision than that
of the court
a
quo.
Also,
in paragraph 2 of the Order of the Supreme Court of Appeal
[49]
the order made by the court
a
quo
in
respect of costs on a punitive scale, when dismissing the application
for leave to appeal, was specifically set aside and the
costs of the
application for leave to appeal were ordered to be costs in the
appeal. By implication, those learned Judges
did not agree that
the defences raised by the Appellant were completely without merit.
Hence, in the exercise of this court’s
discretion, the
invitation to make a punitive costs order when dismissing the appeal
is declined.
[42]
In the premises, the following Order is made, namely:-
1. The appeal is
dismissed, with costs.
2. The costs to be paid
by the Appellant (on a party and party scale) are to include the
costs of the application for leave to appeal
to the Full Court of the
Gauteng Local Division of the High Court, Johannesburg and the costs
of the application for leave to appeal
in the Supreme Court of Appeal
of South Africa.
______________
Wanless
AJ
Judge
of the High Court
I
agree
______________
Ismail
J
Judge
of the High Court
I
agree
______________
Twala
J
Judge
of the High Court
Appearances
For
the Appellant : De Koning SC
Instructed
by : Mills and Groenewald Attorneys C/O H Venter Attorneys
For
the Respondent : Advocate Tessa Halgryn
Instructed
by : Pev Smith Inc.
[1]
Respondent’s Notice of Motion at pages 1 to 3 inclusive of the
record
[2]
Paragraph [24] of the judgment at pages 100 and 101 of the record
[3]
Judgment and order refusing leave to appeal at pages 108 to 111 of
the record.
[4]
Order of the Supreme Court of Appeal at page 112 of the record
[5]
Paragraph 4 of the Appellant’s Notice of Full Court Appeal at
pages 114 and 115 of the record
[6]
Paragraph 5 of the Appellant’s Notice of Full Court Appeal at
pages 115 and 116 of the record.
[7]
Paragraph 6 of the Appellant’s Notice of Full Court Appeal at
pages 116 and 117 of the record.
[8]
Paragraph 7 of the Appellants Notice of Full Court Appeal at pages
117 of the record
[9]
Pages 18 and 19 of the record
[10]
Page 15 of the record , clause 2
[11]
Page 25 of the record
[12]
Page 25 of the record.
[13]
Clause 2.2 of the agreement at page 16 of the record.
[14]
Paragraph 7 of the First Respondent’s “Opposing”
Affidavit at page 41 of the record.
[15]
Paragraph 7 of the First’s Respondent’s “Opposing”
Affidavit at pages 41 and 42 of the record. Annexure
A1 to the First
Respondent’s “Opposing” Affidavit at page 51 of
the record.
[16]
Paragraph 8 of the First Respondent’s “Opposing”
Affidavit at page 42 of the record Annexure A2 to the First
Respondent’s “Opposing” Affidavit at page 51 of
the record.
[17]
Paragraphs 9 to 17 inclusive of the First Respondent’s
“Opposing” Affidavit at pages 42 to 44 inclusive of
the
record. Annexures B1 to D3 inclusive, to the First Respondent’s
“Opposing” Affidavit at pages 53 to 60
inclusive of the
record.
[18]
Paragraph 19 of the Founding Affidavit at page 10 of the record.
Annexure FA3 to the Founding Affidavit at page 32 of the record
[19]
Paragraph 21 of the Founding Affidavit at pages 10 and 11 of the
record. Annexure FA4 to the Founding Affidavit at pages 33 and
34 of
the record.
[20]
Clause 2.2 of the agreement at page 16 of the record.
[21]
Page 15 of the record.
[22]
RH Christie: The Law of Contract (5
th
Edition) hereafter referred to as “Christie”, at page
268.
[23]
Christie at pages 268 and 269.
George
Ruggier & Co v Brook
1966 (1) SA (NPD) at 22H-25D.
[24]
Page 18 of the record.
[25]
Page 25 of the record
[26]
Sub-paragraph 9.2 of the Applicant’s Replying Affidavit Page
71 of the record.
[27]
Rees v Harris
2012 (1) SA 583
(GSJ) at 595H-596A
[28]
Finishing
Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South Africa Ltd
2013 (2) SA 204
(SCA) at 591C-F
[29]
Finishing Touch 163 (Pty) Ltd v BHP Billiton Energy Coal South
Africa Ltd (supra) at 212C-E; Erasmus: Superior Court Practice
(Second Edition), hereafter referred to as “Erasmus”, at
D1-66
[30]
Annexure FA2 to the Founding Affidavit at pages 14 to 31
[31]
Paragraph 15 of the Founding Affidavit at pages 7 to 9 inclusive
thereof. Also, in paragraph 17 of the Founding affidavit
[32]
Page 10 of the record.
[33]
Paragraph 8 of the Applicant’s Replying Affidavit at page 70
of the record
[34]
Sub- paragraph 11.4 t page 73 of the record
[35]
Sub- paragraph 11.5 at page 73 of the record.
[36]
Clause 9 of the agreement at page 19 of the record
[37]
Paragraph [18] of the judgment at pages 94 to 96 inclusive, of the
record.
[38]
Clause 8 b) of the agreement at page 18 of the record.
[39]
Paragraph 21 of the Founding Affidavit at pages 10 and 11 of the
record. Annexure FA4 to the Founding Affidavit at pages 33 and
34 of
the record.
[40]
Pages 5 and 46 of the record
[41]
Paragraph 13 of the Applicant’s Replying Affidavit at page 74
of the record; Annexure RA2 and RA3 at pages 79 and 80 of
the
record.
[42]
Pages 106 of the record.
[43]
Page 117 of the record.
[44]
Leeuw v
First National Bank Limited
2010 (3) SA 410
(SCA) at paragraphs [2] and [5] of the judgment.
[45]
Page 14 of the record.
[46]
Schierhout v Minister of Justice
1926 AD 99
at 109
[47]
Paragraph 6 of the Found Affidavit at page 5 of the application
papers; paragraph 21 of the First Respondent’s Opposing
Affidavit at page 46 of the application papers.
[48]
Paragraph 13 of the Applicant’s Replying Affidavit at page 74
of the application papers; Annexure RA2 and RA3 at pages
79 and 80
of the application papers.
[49]
Page 112 of the application papers