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[2017] ZAFSHC 63
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Warren Farms CC v Ferreira N.O. and Another (352/2015) [2017] ZAFSHC 63 (10 May 2017)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number: 352/2015
In
the matter between:
WARREN
FARMS
CC
Plaintiff
and
ANDRE
MIKRO FERREIRA
N.O.
1
st
Defendant
ALBERTUS
JACOBUS SAAYMAN N.O.
2
nd
Defendant
(CINTI-SHAE
BOERDERY TRUST)
HEARD
ON:
31 JANUARY 2017 & 01 FEBRUARY 2017
JUDGMENT
BY:
CHESIWE, AJ
DELIVERED
ON:
10 MAY
2017
[1]
The plaintiff claims payment of an estate agent's commission of the
sum of R160 740.00 together with interest calculated from
the 24
March 2014 to the date of payment. arising from the sale of an
immovable property being farm Treur Fontein No. 76,
owned by
Cinti-Shae Boerdery Trust (IT1400/2007) in the district of Aliwal
North.
[2]
The issue in the present matter is whether the plaintiff, as estate
agent who introduced a purchaser to the seller, was the
effective
cause of the sale and entitled to the commission.
[3]
The
plaintiff pleads that at all
relevant
times it was the holder of a valid fidelity fund certificate issued
pursuant to the provisions of section 2S(a)
[1]
of
the
Estate
Agency Affairs Act 112 of
1976.
On or about 9 and 12 December 2011, the defendant's Trust,
represented by the 1st defendant, extended a sole mandate to the
plaintiff
to
market
its
farm
property to
the
Department
of Rural Development and Land Reform of the Republic of South Africa
(hereinafter referred to
as
the
department.
As
a
direct
result
of
the
introduction, the
aforesaid
immovable
property was
purchased
at a price of R2 350 000, 00 (VAT exclusive). According to the
plaintiff, it
performed
in terms
of
its
mandate
and
was
the
effective
cause of the sale. It was therefore entitled to the payment of the
agreed commission. During the trial, reference was
made to
the
deed of sale attached to the documents marked annexure A1 & A2.
In
terms
of
paragraph
1 and
2
thereof
the
seller
was liable
for
the
payment
of the
agent's
commission in respect of
the
sale.
[4]
The defendant admitted that Mr Garth was introduced to the property,
but denied that as a result of this introduction or if
indeed the
deed of sale was entered into at all. the plaintiff was the effective
cause of the sale or that the plaintiff performed
his obligation in
terms of the mandate. The defendant submitted that the sole mandate
expired after six months and the deed of
sale did not refer to any
agent's commission at all. The defendant further submitted that the
plaintiff did not establish its entitlement
to the payment of the
commission and in the absence of any connection between the
introduction and conclusion of the sale ultimately
to the government,
the plaintiff was therefore not entitled to payment of
commission.
[5]
The plaintiff called Mr Garth who testified that he was an estate
agent for 10 years and worked for the plaintiff. He assisted
the
department to find farms for "their beneficiaries" who are
emerging black farmers whom the department wanted to benefit
for land
reform purposes. Mr Garth requested the information of the farm from
Mr Strydom who in turn gave Mr Garth the contact
details of Mr
Ferreira. Mr Garth met with Mr Ferreira and the, deed of sale was
signed by Mr Garth as the agent of the plaintiff
and Mr Ferreira as a
trustee of Centi-Shae Boerdery Trust (IT1400/2007).
[6]
Mr
Garth prepared all the documents for a presentation. He put the
information of the farm on the website and the information was
sent
to
prospective
buyers as well as to the department. Mr Vincent
Paul
from
the
department
contacted
Mr
Garth,
requesting
him to do a sole mandate with
the 1st defendant. Mr
Garth
informed the 1st defendant that the department requested that a sole
mandate should be signed by the seller. The 1st defendant
informed Mr
Garth that he can only have a sole mandate for one month. Mr Garth
accordingly advised the 1st defendant that the sole
mandate should be
for a period of 6 months as the department required a longer period.
Mr Garth testified that he wanted the sole
mandate to be for 12
months, but Mr Ferreira insisted on a six months' sole mandate. The
parties agreed on a six month mandate
and it was signed by both of
them.
[2]
[7]
Mr Garth said after all the documents were provided to Mr Vincent
Paul, he took him to the farm. Mr Vincent was impressed with
the farm
and indicated to Mr Garth he would discuss the farm with the
committee. Thereafter, Mr Garth had regular telephone contact
with
1st defendant. On 6 March 2013 the department sent a letter to Mr
Garth on behalf of Mr Ferreira. In the letter the department
made an
offer to purchase the farm for an amount of R2 350 000,
00.
Mr Garth forwarded the letter to Mr Ferreira in order for Mr Ferreira
to acknowledge and respond to the letter of the department.
Mr
Ferreira responded and indicated in a letter dated 10 July 2013 that
the offer of R2 350 000, 00 was accepted.
[8]
Mr Garth testified that soon after Mr Ferreira acknowledged the
letter from the department the latter ignored his phone calls
and
emails. He later did his own researched with the deeds office and
discovered that the farm was registered on 24 March 2014.
He
immediately attempted to contact Mr Ferreira, but all his calls were
unanswered. He said that he was not aware of any other
agent that had
marketed the property other than him. He added that he dealt
exclusively with farms and has successfully sold 15
farms to the
department.
[9]
Mr Garth, under cross examination, explained that
it was the norm to sign a deed of sale and the sole mandate at
the same
time; that the purpose of the sole mandate was to get the
department involved; as the department did not wish to deal with too
many estate agents. He explained that he found it difficult to
understand why the 1st defendant denied that he had introduced the
farm to the department even thoug
h he was in
constant contact with the 1st defendant. He said the 1
st
defendant had no issue after the six month period had expired with
regard to the continued correspondence between them
.
The 1
st
defendant did not mention anything about the sole mandate having
expired, neither did Mr Ferreira, during their phone calls, make
him
aware that there was another agent; or that Mr Ferreira himself was
also involved in marketing the farm. Mr Garth rejected
the version
of Mr Ferreira. That concluded the plaintiff's case
.
[10]
The 1
st
defendant Mr Ferreira testified that when the
sole mandate was signed at Wimpy, Mr Christo Strydom, Mr Jooste
and Mr
Garth where all present. He did not dispute that the sole
mandate was signed but that is was only for one month. He said Mr
Garth
had requested that the mandate be signed for a longer
period of 12 months but that he only agreed to a sole mandate of six
months. He refused to have a longer sole mandate. Mr Ferreira
said the commission part was left blank as the parties had
not yet
agreed on the percentage of the commission. He further mentioned that
the word “sold” was left out in the paragraph
of the sole
mandate, which was to read as:
“
The
property is sold during the currency of this sole agency a price
acceptable to me.”
[11]
According to Mr Ferreira the sole mandate expired
in June 2012. After the sole mandate expired, he proceeded to sign
new mandates
to sell the farm to other people. He mentioned some of
the people as Mr Tobie Myburg Auctioneers. Oom Alex but could not
remember
his surname
.
He also
proceeded to show the farm to other people; Mr Abednigo Mxigi was one
of the interested people to buy the farm. He continued
to have
contact with Mr Abednigo Mxigi. He said he did that as the department
and Mr Garth where quiet for a long
time.
[12]
He testified that when he received the offer
letter from the department he took it immediately to his attorneys,
as he did not know
what to do with the letter after the mandate had
expired. Mr Ferreira explained that he did avoid the phone calls of
Mr Garth.
as he did not want to sign a
new
sole mandate with the agent.
[13]
Mr Ferreira, under cross examination. accepted that the farm was
marketed on the web page of the plaintiff. He said when he
completed
the sole mandate form, he only later realised that the
word 'sold' was not in the contract. He did not explain
what he did
when he realised the word 'sold' was not in the sole mandate. He
insisted that he wanted the farm to be sold within
six months. Mr
Ferreira further accepted that all the documents of the farm where
given to the department. He accepted that the
mandate had expired and
therefore did not discuss the expired mandate with Mr Garth.
[14]
He testified that he introduced Mr Abednigo Mxigi
to the department. It was put to him that the department identified
the person
who the farm must be
allocated
to. He did not dispute that. He said he did not pay plaintiff the
commission as Mr Garth did not sell the farm within
six months. He
was the person who marketed the farm to other potential buyers. He
acknowledged that if Mr Garth had sold the farm
within the six months
of the mandate. he
would have
paid
the
commission.
[15]
Mr Ferreira in his pleading, had disputed that he
had no mandate to sign the mandate without the assistance of the
second defendant.
That he was not as the
1st
defendant authorised to present the Trust.
However
1
during the trial he
concede
d
.
[16]
With regard to defendant's plea that the proper
interpretation of the written mandate did or did not require that for
its fulfilment,
the plaintiff had to secure the sale of the farm
within six months. The Estate Agency Affairs Board Code of
Conduct determines that:
an estate agent
shall offer:
1.
"Immovable property
for sale
.
.
..
unless
he
has
be given a mandate to do
so
by
the seller
of the
property, or
his duly
authorised agent
;
2.
Accept a sole mandate, or
the
extension
of the per
i
od
of an
existing mandate, unless
all the terms of such a mandate or extension
,
as the case may
be are
in writing and signed
by
the
client.
3.
The expiry date of the
mandate or extension as
the
case
may be
which
shall
be
expressed as
a
calendar date,
specifically recorded in
the sole mandate
.
"
[17]
The documents, annexures A1 and A2, are easily
discernible. The
1st
defendant argued that the parties where not in
agreement on an open ended mandate and their contract did not have a
mandate to that
effect. In respect of the conduct of the plaintiff, I
cannot see any misconduct on his part with regard to the
manner in which the mandate was presented to the
1st
defendant.
The
1st
defendant
submitted that the minds of the parties did
not
meet as they interpreted the
mandate
in different ways
.
[18]
The rules of interpretation of a mandate requires
that it be inter
preted to its context as a whole
:
the language used in the mandate, the
circumstances within which it was concluded, the purpose of the
document and any particular
clause or portion thereof, the avoidance
of absurdity and inconsistency giving the document a good business
sense in accordance
with sound commercial practice. Mr Garth has been
an agent from
2006. He had
sold over 15 farms to the
department. It is
therefore
expected of him that he understood the rules of
interpretation of a mandate, as well as ensured that the defendant
fully understood
the contents of a sole mandate. Mr Ferreira on the
other hand signed the sole mandate, that being in agreement with the
mandate.
[19]
This
matter amounts to one of interpretation and it is incumbent upon the
court to ascertain the intention of the parties which,
in the first
instance, must be gathered from the language of the clause itself
[3]
.
The words of a contract must be given their plain, ordinary, popular
and grammatical meaning, unless it clearly appears from the
context
that the parties intended them to have a different meaning.
[4]
As
the Supreme Court of Appeal stated in
Natal
Joint Municipal Pension Fund v Endumeni Municipality
[5]
that:
"...
Interpretation is the process of attributing meaning to the words
used in a document, be it legislation, some other statutory
instrument, or contract, having regard to the context provided by
reading the particular provision or provisions in the light of
the
document as a whole and the circumstances attendant upon its
coming into existence. Whatever the nature of the document,
consideration must be given to the language used in the light of the
ordinary rules of grammar and syntax; the context in which
the
provision appears; the apparent purpose to which it is directed and
the material known to those responsible for its production.
Where
more than one meaning is possible each possibility must be weighed in
the light of all these factors. The process is objective,
not
subjective. A sensible meaning is
to
be preferred to one that leads to insensible or unbusinesslike
results or undermines the apparent purpose of the document."
[6]
In
my view! the contract was clear and plain to understand as it made
good business sense with sound commercial principles.
[20]
The court has to guard against changing the agreement of the
parties. Its purpose is to
determine
the meaning of the
1
document
[7]
.
Thus if
the
word
‘sold’ is
inserted
by
the
court
it
would
be changing the meaning of the document and it is not for the court
to impose the views of the party on a contract they had
both sighed
while fully alert to its contents.
[21]
The primary and determinative issue between the parties is whether
the plaintiff was the effective cause of the sale and if
the
plaintiff
introduced the purchaser to the property which will
result
in
the plaintiff being entitled to commission.
[22]
The
usual or customary terms of the mandate are that, in the event of the
estate agent introducing to his principal, the owner of
the
propert
y
1
a
purchaser
for
the
property
who
is
willing
and
able
to purchase it and
the
transaction is successful and
finalised,
then in that case, the agent is the effective cause of the sale. As
such, the estate agent is entitled to payment of
an agreed
commission. The plaintiff in the papers and Mr Garth during his
evidence,
confirmed and testified that he sent the sale documents to the
department. Mr Garth took Mr Vincent Paul of
the
department to the farm for an inspection
of the
farm.
Mr
Paul
immediately
required that a sole
mandate
must be
signed
by the seller.
[22]
In
the matter of
Lieb
and Another NND v I Kuper (Pty)
Ltd
[8]
the
court
was
of
the
view
that:
"...The
ordinary law of agency requires the agents efforts to be the
effective or efficient cause of the ensuing sale. Whether
one refers
to those efforts as an introduction or as finding a purchaser or
by
any other words does not matter.
As
I have already shown, whether the introduction is of the property
itself to the purchaser, or of the seller to the purchaser,
matters
not, so long as such introduction, or what followed upon it, was the
efficient or effective cause of the sale."
[9]
[23]
In
Aida
Real
Estate
Ltd
v
Lipschitz
[10]
the
court
stated
that:
"A
proviso has been added to the effect that the introduction of the
able
and willing buyer must have been the effective cause or
causa
causans
of
the sale. If a new factor intervenes causing or contributing to the
conclusion of the sale and the new factor is not of the making
of the
agent, the final decision depends on the result of a further
enquiry...
did
the new factor outweigh the effect of the introduction by being more
than or equally conducive to the bringing about of the
sale as the
introduction was, or was the introduction still overridingly
operative? Only in
the
latter instance is commission said
to
have
been earned..."
[11]
[24]
The
1
st
defendant denied that the plaintiff introduced
the farm to the department. In his evidence the
1
st
defendant indicated that he was also
involved in taking potential buyers to the farm. However, none of
those that the defendant
introduced bought the farm. The
1
st
defendant claimed that Mr Abednigo Mxigi
was one of the people that were introduced to the farm and he became
the successful buyer.
Mr Mxigi was the beneficiary that the farm was
allocated to by the department. Bearing in mind that the department
has a reform
objective and that land is simply not acquired for the
sake of it. There would always have to be a beneficiary in that
process.
Mr Garth clearly explained this process and that the
department was responsible for identifying the beneficiaries for
which it
bought the land.
[25]
Adv. De La Harpe on behalf of the plaintiff
submitted that the plaintiffs' introduction of the farm to the
department and the department
to commence with its internal process
was predominantly due to the initiated introduction by the plaintiff
which in the event led
to the cause and effect of the sale. The
plaintiffs witness, Mr Garth struck me as a person who
understood the internal
process of the department. Mr Garth explained
in detail to the court the process which he followed when working
with the department
to introduce it to potential sellers and was able
to explain the different committees that the process must go through
to
be
eventually finalised.
[26]
The
approach adopted by the court in determining the effective cause of
the sale has been illustrated in a number of
judgments
which serve as a useful guide
[12]
.
In
Webranchek
v IK Jacobs
&
Co
Ltd
[13]
Heever
JA held that:
“
...
the
sale is chiefly attributable to the efforts of plaintiff; in other
words that those efforts constituted the dominant or effective
cause
of the sale...
[14]
”
In
the
Aida
Real Estate Ltd v Lipschitz
[15]
which is more instructive, the court held that the agent was
the effective cause of the sale and was entitled to
commission.
[27]
I
now turn to deal with the issue of tacit agreement on the commission
percentage. The
1
st
defendant
claimed that the plaintiff's mandate had expired after six months,
and did not necessarily deprive the agent of his claim
of commission
as the introduction was still the overriding factor
[16]
.
The
commission payable depended on the terms of the mandate and both
parties confirmed that there was no agreement. The plaintiff
indicated that it was assumed that the commission would be the usual
rate of six percent. If nothing was said, plaintiff may rely
on an
implied term to the effect that the commission was payable according
to the
generally
accepted tariff
[17]
.
[28]
It
is trite law that an estate agent may recover his or her commission
even if the mandate was terminated or had expired by the
time a sale
is brought about by the earlier efforts of the agent. In
Le
Grange v Metter
[18]
the
court
said:
"Our
law with regard to agents' commission has regard to the substance
rather than the form and is singularly free from technicality.
Thus a
broker, or other selling agent, has (in the absence of any express
agreement to the contrary) been held repeatedly to he
entitled to his
commission, when once it is established that he was the "efficient
cause" of the sale, notwithstanding
that such sale may only go
through long after his active efforts have ceased, and
notwithstanding that such sale may
eventually be
concluded directly between the parties without his participation, and
notwithstanding that such sale may go through
on different terms and
conditions from those on which the broker or agent
was
employed
to
sell..."
[19]
[29]
Mr Garth's evidence was that it was customary and the usual rate of
commission of six percent is charged for a farm of that
size and for
the price of R2 350 000 (VAT exclusive.) Page 4 of the trial bundle
provided for the payment of commission at six
percent of the selling
price, and page 16 of the trial bundle implied that the same rate of
commission was to be applied. Mr Garth
testified that he could not
fill in the blank, as Mr Ferreira had signed the document and he
accepted that it was common cause.
Mr Ferreira testified that there
was no agreement on the percentage of the commission, but did not
plead a different rate of commission.
Nor was the
evidence of Mr Garth challenged in respect of the
six percent commission that was not indicated
on the sole mandate
documents.
[30]
In
my view, the estate agent's wisdom and business acumen brought the
seller and the purchaser together. In such instances the agent
would
be entitled to remuneration. Commission of the estate agent is paid
by results and not by good intentions or even hard work
[20]
.
Accordingly, the plaintiff's introduction was the effective cause of
the sale. The plaintiff is therefore entitled to that commission
at
the rate of six percent which is customarily applicable in
such
transactions.
[31]
Under the circumstances, I am satisfied the plaintiff has established
on the balance of probabilities that he introduced the
department to
the farm and the departmental activities as a causative factor in the
conclusion of the sale of the farm and that
the plaintiff is entitled
to the payment of commission and that the plaintiff established the
existence of a tacit term as to the
rate of commission payable in a
sum equal to six percent of the selling price.
[32]
I am further satisfied that transfer of the property occurred on 24
March 2014 and thus interest on commission should accrue
from this
date.
[33]
In the result, I make the following order:
1.
The defendants to pay the sum of R141 000, 00 (inclusive of vat) of
R19 740, 00 of the selling price of R2 350 000,
00.
2.
The defendants to pay interest on the sum of R141 000, 00 calculated
at the legal rate of interest from 24 March
2014 to date of payment.
3.
The payment of the plaintiff's taxed party and party costs of suit.
____________________
S.
CHESIWE, AJ
On
behalf
of
plaintiff:
Adv. De La Harpe
Instructed
by:
AG Cooper Majiedt Inc.
BLOEMFONTEIN
On
behalf
of
defendants:
Adv.
L
J
Joubert
Instructed
by:
Oosthuizen, Marais & Pretorius Attorneys
GEORGE
[1]
Section
26(a) of the Estate Agency Affairs Act 112 of 1976 states that
"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"
[2]
Annexure
A1
,
the
one month mandate showed 6% commission and A2. one of 6 month the
percentage
was
not
inserted
on
the
document.
Mr
Garth
testified
that
it
is
generally
accepted
that
the
commission
is
6%
for
a
farm
being
sold
at
that
price
and
the
size
of
the
farm
.
[3]
Picardi
Hotels Ltd v Thekwini Properties (Pty) Ltd
[2008] ZASCA 128
;
2009
(1) SA 493
(SCA)
[4]
Ibid
para [5]
[5]
Natal
Joint Municipal Pen
s
ion
Fund v Endumeni Municipality
2012
(4) SA 593
(
SCA)
[6]
Ibid
para
[18]
[7]
Natal
Joint
Municipal
Pens
i
on
Fund
v Endumeni Municipality
2012
(4) SA 593
(SCA) para (18)
[8]
Lieb
and Another NNO v J Kuper
&
Co
(Pty)
Ltd
1982
(3) SA 708 (T)
[9]
Ibid
at 713 f
-
g
[10]
Aida
Real Estate Ltd v Lipschitz
1971(3)
SA 871(W)
[11]
Ibid at 873 H 874A. See also Mano ET Mano Ltd v Nationwide Airlines
(Pty) Ltd and Others
2007 (2) SA 512
(SCA) and Wynland Properties CC
v Potgieter and Another
1999 (4) SA 1265
(C)
[12]
See
Aida
Real
Estate
Ltd
v
Lipschitz
above,
Webranchek
v
L
K
Jacobs
&
Co,
Ltd
1948
(4)
SA
671
(A),
Nach
Investments
(Pty)
Ltd
v
Knight
Frank
South
Africa
(Pty)
Ltd
(2001)
3
All
SA
295
(SCA)
and
also
Basil
Elk
Estates
(Pty)
Ltd
v
Curzon1990
(2)
SA
1
(TPD)
amongst
others.
[13]
Webranchek
v L KJacobs
&
Co,
Ltd
1948
(4) SA 671 (A)
[14]
Ibid
at 685
[15]
Aida
Real Estate Ltd v Lipschitz above
[16]
Basil
Efk
Estates
(Pty)
Ltd
v
Curzon1990
(2)
SA
1
(TPO)
and
see
also
Aida
Real
Estate
Ltd
v
Lipschitz
above
at
874
[17]
Muller
v Pam Snyman E
i
endoms
Konsultante (Edms) Bpk
2001
(1) SA 313 (C)
[18]
Le
Grange v Metter
1925
CPD 76
[19]
Ibid
at
80
[20]
Aida
Real Estate Ltd v Lipschitz above
at
875
E
·
H
.