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[2018] ZAFSHC 198
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Tria Real Estate (Pty) Ltd t/a Pam Golding Bloemfontein v Labuschagne and Another (5583/2018) [2018] ZAFSHC 198 (6 December 2018)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 5583/2018
In
the matter between:
TRIA
REAL ESTATE (PTY) LTD t/a PAM
GOLDING Applicant
BLOEMFONTEIN
and
MANDY
LABUSCHAGNE 1
st
Respondent
METRO
REALTORS (PTY) LTD t/a
METRO 2
nd
Respondent
REAL
ESTATE
HEARD
ON:
16 NOVEMBER 2018
JUDGMENT
BY:
MATHEBULA, J
DELIVERED
ON:
06 DECEMBER 2018
[1]
This matter served before me as an opposed urgent motion. The
applicant seeks to interdict and restrain the first respondent
from
utilising and/or communicating confidential information relating to
its business affairs, property listings, pricing, valuations
etc.
In addition from operating in any capacity in the residential
property market in the suburbs of Universitas, Universitas
Ridge and
Langenhoven Park, Bloemfontein for a period of six (6) months from
the date of the order of this court. The order
sought against
the second respondent is the interdict to utilise any information
referred to above obtained from the first respondent.
Essentially it is an interdict from employing the first respondent
until the period of six (6) months has elapsed.
[2]
The applicant is Tria Real Estate (Pty) Ltd trading as Pam Golding
Bloemfontein. Pam Golding is one of the leading brands
in the
property industry in this country. The first respondent is an
Intern Agent whose ultimate goal is to qualify as an
Estate Agent.
The second respondent is a company with limited liability operating
as an Estate Agency situated at 6 Badenhorst
Street in the suburb of
Universitas, Bloemfontein.
[3]
On 4 May 2017 the applicant represented by its manager Hennie Aucamp
concluded an Intern Agency Agreement with the first respondent.
It was specifically mentioned in the agreement that it is governed by
the provisions of the Estate Agency Affairs Act 112 of 1976.
It was
also stated that the applicant has met the necessary requirements to
enter into such an agreement as a qualified Estate
Agent holding the
valid Fidelity Fund Certificate. As stated in paragraph two (2) above
the ultimate goal was to enable the first
respondent to qualify as an
Estate Agent.
[4]
The agreement also contained a restraint of trade clause barring the
first respondent from engaging or participating in the
property
industry for a period of six (6) months after the termination of the
agreement between the parties. It was also provided
that the
applicant had the power to lift the restraint or shorten the period
thereof. Further, in the event of any breach the applicant
could take
legal steps against the first respondent.
[5]
On 12 October 2018 the first respondent resigned as an employee of
the applicant effectively terminating the agreement. Despite
persuasion from the director of the applicant, she could not change
her mind. Later she joined the second respondent as an intern
agent.
It was at this point that the applicant invoked in particular clause
16 of the agreement dealing with the restraint as alluded
to in
paragraph one (1) above.
[6]
There are several contentious issues that are raised by both parties
in this matter. The pertinent one is the legality or validity
of the
agreement entered into by them. I intend to deal first with this
aspect. The contention of counsel for the applicant is
that the
applicant has a valid Fidelity Fund Certificate as it appears on page
80 of the papers. Also that the first respondent
is not bona fide in
her contentions as she entered into an agreement with the applicant
without raising the issues she is relying
upon. During this period
(approximately eighteen months) she gained knowledge of valuable
importance pertaining to the business
of the applicant. To that
extent this matter was of cardinal importance to the applicant.
[7]
The contention of counsel for the respondents is that the applicant
is a company with limited liability operating as a estate
agency.
This is different to an entity in whose name the Fidelity Fund
Certificate has been issued. In addition, the agreement
is void and
unenforceable because all directors of the company did not possess
the aforementioned document.
[8]
There are two (2) fundamental flaws that render the agreement between
the parties to be invalid therefore unenforceable. Firstly,
the
applicant is cited as Tria Real Estate (Pty) Ltd trading as Pam
Golding Bloemfontein. This means that it is a company with
limited
liability registered in accordance with the Laws of the Republic. It
is a legal entity that can sue and be sued in its
own right. In
short, it has a legal personality separate from that of its
directors. Its core business is that of an estate agency.
[9]
The Fidelity Fund Certificate referred to on page 80 of the papers is
issued to Tria Real Estate CC. A close corporation is
also an entity
with separate identity to that of its members. It has its own legal
personality and can sue and be sued in its own
name. Strictly
speaking it is a different entity to a company cited as the applicant
in this matter.
[10]
These two (2) entities cannot be the same and be equated as such.
They are separate entities. In this matter the close corporation
was
converted into a company in December 2013. This means that the close
corporation ceased to exist as far back as December 2013.
So, the
Fidelity Fund Certificate was issued to a non-existing entity. The
submission that the new Companies Act did not envisage
a shutdown of
the operations of an entity during conversion does not hold water at
all. I was not referred to any authority to
support that proposition.
There is no plausible explanation as to why five (5) years later
after the conversion of the close corporation
to a company, the
certificate is still issued in the name of a non-existing entity. The
assurance (if any) by the officials of
the Estate Agency Affairs
Board that there is nothing wrong in such conduct despite a glaring
transgression of the law is unacceptable.
[11]
I come to this conclusion because Section 29B of the Companies Act 61
of 1973 provides that:-
“
When a company
is converted into a close corporation in terms of the Close
Corporation Act, 1984, the Registrar shall, simultaneously
with the
registration of the founding statement of the close corporation by
the Registrar of Close Corporations in terms of the
said Act, cancel
the registration of the memorandum and articles of association of the
company concerned.”
This
will likewise apply when the conversion is from a close corporation
to a company. A new entity is formed and the previous one
simply
ceases to exist.
[12]
The second issue concerns the regulation of the property industry and
the requirements to practice the profession. The regulator
of all
estate agents is the Estate Agents Affairs Board. In terms of Section
26 of the Estate Agency Board Act 112 of 1976 any
person is
prohibited from performing any act as an estate agent unless a valid
Fidelity Fund Certificate has been issued to him
or her. In the event
that such a person is a company, each and every (my emphasis)
director of that company must also possess a
valid Fidelity Fund
Certificate. The same applies to the close corporation that each and
every member must possess one. This also
extends to every person
employed by such an entity as an estate agent. It is not enough
that the application is being processed
or some other hiccup is in
the process of being solved. The provisions are clear and peremptory.
[13]
These requirements were emphasised and the courts concluded that it
is the transgression of the law not to adhere to section
26.
[1]
The issuing of Fidelity Fund Certificates to Estate Agents is to
ensure that the public is not hard done by unscrupulous
elements
within the property industry. It is a controlling measure to
minimise or eliminate the risk that the unsuspecting
public may be
exposed to. In short, it is a licence to practice whithout
which you cannot practice.
[14]
The contention that the certificate issued to a close corporation
should be deemed to have been issued to a company because
it is the
“same” entity has no merit. As stated earlier I have not
been referred to any legal authority and despite
diligent search I
could not find any to sustain this argument. In this matter the
applicant was not in possession of a valid Fidelity
Fund Certificate
and therefore not in compliance with the governing Act. This means
that the applicant could not act as an Estate
Agent. This failure to
comply as stated above renders the agreement entered between the
parties null and void thus unenforceable.
[15]
It stands to reason that this application ought to fail. The
applicant as the losing party must pay the costs of the respondents.
In the exercise of my discretion, I do not deem it appropriate that
it should be on a punitive scale. There is nothing in my view
that
the conduct of the applicant pursuing this matter justify such an
order.
[16]
In the circumstances the order is as follows:-
16.1 The application is
dismissed with costs.
_____________
MATHEBULA,
J
On
behalf of applicant: Adv. J J F Hefer SC assisted by
Adv.
J J Buys
Instructed
by: Willers Attorneys
BLOEMFONTEIN
On
behalf of respondents: Adv. M. Louw
Instructed
by: Hugget Retief Attorneys
BLOEMFONTEIN
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