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[2016] ZAGPPHC 433
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Heckroodt v Wall (A836/2014) [2016] ZAGPPHC 433 (10 June 2016)
REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
CASE
NO: A836/2014
10/6/2016
REPORTABLE:
NO
OF
INTEREST TO OTHER JUDGES: NO
REVISED.
In
the matter between:
P
HECKROODT
Appellant
and
T
A
WALL
Respondent
JUDGMENT
TEFFO.
J:
[1]
The appellant in this matter, who was the defendant in the court a
quo
appeals against the judgment of the Magistrate Court,
Pretoria ordering him to pay the plaintiffs claim. The present
respondent
was the plaintiff in the court a
quo.
The parties
shall for convenience be referred to as they were in the court a
quo.
[2]
The plaintiff instituted an action against the defendant which
consisted of two claims in the amounts of R100 000,00 and R80
000,00
respectively for damages suffered as a result of failure by the
defendant to pay the aforesaid amounts to him. The action
was based
on contract and in the alternative on delict. The plaintiff
eventually proceeded with the delictual claims.
[3]
It was alleged in the plaintiff s particulars of claim that
the first defendant who became the only defendant
in the
court a
quo
was appointed to act as a conveyancer to attend to
the registration and transfer in two agreements where two immovable
properties
were sold. In terms of both transactions he was instructed
to pay the estate agent commissions in the amounts claimed upon
transfer
of the properties. The estate agent commissions in both
transactions were in terms of the agreement C1 and C2 payable to the
second
defendant, Anzel Trading 1002 CC t/a lnvestment@home. The
plaintiff purchased the right, title and interest in the estate agent
commission earned by the second defendant in the aforesaid
transactions. Commission schedules in respect of both transactions
were signed by the plaintiff and the second defendant ceding the
estate agent commissions in the amounts claimed, due to the second
defendant to the plaintiff. On or about 6 August 2010 the defendant
was informed in writing that payment was to be made to the
plaintiff.
This was also confirmed by the plaintiff in writing on 15
February 2011. The registration took place on 12 January
2011.
[4]
Several other defendants which included the sellers and purchasers of
the properties in the two transactions were cited in the
action but
the plaintiff only sought relief against the first defendant.
[5]
In the alternative to claim 1 it was alleged that the first defendant
in his capacity as conveyancer had a legal duty to act
in the
interest of all interested parties to the transaction. In breach of
this legal duty, the first defendant transferred the
property without
ensuring that there were sufficient funds to attend to the payment to
the plaintiff. As a result of the breach
of the legal duty and the
first defendant's contractual obligations, the plaintiff
suffered damages equal to the amount that
the plaintiff would have
received in the amount of R100 000,00.
[6]
The alternative to claim 2 also emanated from similar circumstances
and damages claimed were in the amount of RBO 000,00.
[7]
The defendant pleaded as follows to the alternative claims: In
respect of the alternative to claim 1 he denied the allegations,
liability, contended that he had no agreement with the plaintiff and
provided no guarantees that he would pay him. He also pleaded
that he
paid the amount of R70 000,00 to the second defendant as he was
obliged to do and that the second defendant received the
remaining
R30 000,00 directly from the purchaser. He further pleaded that the
plaintiff was never a party to the transaction, that
he was never
made aware of the existence of the cession agreement and that the
plaintiff should seek recourse against the second
respondent with
whom he contracted. As regards the alternative to claim 2 although he
denied that he had a legal duty to act in
the interest of all
interested parties to the transaction as a conveyancer at all
material times, he admitted that he transferred
the property without
ensuring that there were sufficient funds to attend to the payment of
the plaintiff. He also denied liability.
[8]
Two witnesses and the plaintiff himself adduced evidence in support
of the plaintiff's case and the defendant was the only witness
who
testified in defence of the allegations against him.
[9]
The evidence that was led at the court below was briefly as follows:
The plaintiff was the sole proprietor of Omega Finance
which business
provided bridging finance to among others, the second defendant who
traded as an Estate Agent. The plaintiff confirmed
the main agreement
between Omega Finance and the second defendant as contained in
paragraphs 1 to 5 Bundle A in terms of which
it was agreed that if
the second respondent was entitled to commission from a property
transaction, Omega Finance would provide
bridging finance to it on
condition that the second respondent would cede its right to the
commission to it. The second respondent
became entitled to the
commission from the two property transactions. On page 21 Bundle A
there appeared a deed of sale of the
first property transaction
between one De Witt and Mrs Beaufort which property was sold for R690
000,00 and the commission payable
in respect thereof was the sum of
R100 000,00. The plaintiff advanced an amount of RBO 000,00 to the
second defendant and the second
defendant ceded the full R100 000,00
commission to the plaintiff. The plaintiff was therefore
entitled to payment of the
sum of R100 000,00 commission on
registration of property. The second transaction related to the sale
of the property of Mr and
Mrs Goosen in Magalieskruin for an amount
of R850 000,00. The plaintiff provided bridging finance to the second
defendant in the
sum of R64 000,00 and the second defendant
ceded to him a full amount of RBO 000,00 which was the commission
payable as per
the transaction.
[10]
Clause 1.1 in both deeds of sale provided that the deposit of the
purchase price must be paid either to the conveyancer's trust
account
or that of the estate agent.
[11]
It was common cause between the parties that both amounts of R100
000,00 in the first transaction and RBO 000,00 in the second
transaction respectively, were paid into the second defendant's trust
account. The second defendant only paid the amount of R70
000,00 to
the plaintiff in respect of the first transaction leaving a balance
of R30 000,00. The parties agreed that the amount
payable in respect
of the alternative to claim one was R30 000,00 and not R100 000,00 as
alleged in the plaintiff's particulars
of claim. The plaintiff never
received any amount from the second transaction.
[12]
Correspondences were sent to the defendant in the form of e-mails by
the plaintiff requesting the defendant to furnish guarantees
for
payment of the commission to him in terms of the cession. A letter
from the plaintiff to the defendant giving him the plaintiff
s
banking details and advising him to pay the amount for the
commissions on registration was also referred to. The defendant did
not respond to the letters. On 15 November 2010 the plaintiff
personally visited the defendant to inform him about the cession.
The
defendant advised him that he could not give him the undertaking as
the funds were not paid to him. The defendant set off the
commissions
payable against the deposits that were paid directly to the second
respondent.
[13]
The evidence of Ms Gwen van Aswegen was as follows: She worked
as an administrator for the second respondent from August
2010 to
March 2011. She also worked for the plaintiff. She was aware of the
two property transactions. She explained that the second
defendant
was entitled to commission in respect of the two property
transactions. The plaintiff provided bridging finance to the
second
defendant on condition that it ceded to the plaintiff the commissions
payable to it. In terms of the deeds of sale the commissions
were
payable on transfer of the properties. She drew up the documents for
bridging finance which consisted of the document that
sets out the
cession, a schedule regarding the commission and a letter that
confirmed the cession and requested an undertaking
from the defendant
who was the transferring attorney to pay the amount to the plaintiff.
The letter was sent to the defendant as
testified by the plaintiff,
no reply was received and another correspondence was sent as a
reminder to the defendant to give an
undertaking. She reported the
matter to the plaintiff and the plaintiff eventually visited the
defendant.
[14]
Mr Schalk van der Merwe also gave expert evidence. A summary of his
evidence was contained in his R24(9)(b) notice. The relevant
paragraph that is pertinent to these proceedings reads:
"3. In his
opinion the reasonable conveyancing attorney, acting with the general
level of skill and diligence possessed and/or
exercised by members of
the conveyancing profession, would have acted as follows,
namely:
3.1.
He
would have attended to the finances of the transaction in accordance
with his client's instructions contained in the deeds
of sale
referred to above;
3.2.
An
important part of the conveyancer's duties is to attend to the
financial aspects of
a
transaction: securing and safeguarding
payment of the purchase price, attending to payment of various third
parties' claims (f.i.
the local authority, SARS, the estate agent,
settling the existing bond);
3.3.
In
attending to these financial arrangements, the conveyancer has to
give effect to any legal instruction by any of the parties
as
contained in the agreement of sale, and commission agreement or
addendum thereto. Should
a
third (outsider) party lay
a
claim to any of the proceeds, the conveyancer should at least
obtain his client's instructions with regards thereto and advise the
outside party of his instructions;
3.4.
He
would specifically have ensured that the purchase price would become
available for distribution to the seller pari passu with
the
execution of the transfer of the property in the deeds office;
3.5.
As
an agent of the seller, and being aware of the cession from the
estate agent to the plaintiff, he would have to ensure that the
amount of the commission payable to the estate agent would be paid to
the plaintiff in accordance with the cession and the seller's
instructions referred to in paragraphs 2.2.5 and 2.3.2 above;
3.6.
Knowing
that the estate agent did not have any claim to the money in its
trust account
as a
result of the cessions:
3.6.1.
He could not have paid the estate agent via set off, and
3.6.2.
He should have ensured that the Estate Agent pay the amount in
its trust account prior to the transfer taking place or at least have
obtained an undertaking or guarantee from the Estate Agent that the
amount would be paid to him upon registration,
3.6.3.
He could not have refused or neglected to pay the plaintiff
when he had specific instructions from his client to pay the Estate
Agent and the Estate Agent had ceded this claim to the plaintiff,·
3.7.
The
reasonable conveyancer in the position of the defendant:
3.7.1.
Would have foreseen that if he
fails to make payment of the commission to the
plaintiff
that the plaintiff could suffer damages;
3.7.2.
Could easily have taken steps such
as
paying the
plaintiff or ensuring that there were sufficient funds in his account
or available for distribution to also cover the
claim of the
plaintiff,·
3.8.
The
defendant owed the plaintiff
a
legal duty not to act
negligently even if the plaintiff was not his client;
3.9.
The
defendant had to deal with money its trust account in such
a
way
that harm is not negligently caused to the
plaintiff,·
3.10.
In
his opinion the defendant did not act
as a
reasonable
conveyancing attorney, should have acted for the reasons referred to
above."
[15]
The defendant testified that he was appointed as a transferring
attorney in the two property transactions referred to by the
plaintiff. He is not a conveyancer. He takes transfer instructions
and passes them to a conveyancer to assist with the transfers.
Ms
Geraldine Grundling of the firm Jacobs and Moodley attended to the
transfer in both transactions. He only became aware of the
cessions
when he saw them as attachments to the summons. The only document
that was sent to him was the sale agreement. The deed
of sale in the
first transaction was signed in August 2010. He received e-mails in
October 2010, one about the cession, and another
one asking for the
guarantees and whether the property was transferred or not. He only
replied to the e-mail pertaining to the
transfers in the second
transaction. In reply thereto he stated that he was aware that the
deposit was in the second defendant's
trust account and asked for it
to be transferred in full to his trust account. In the alternative he
asked the second defendant
to pay him R20 000,00 and also give him a
guarantee that it will not utilise the amount of R80 000,00 prior to
the registration
of the property. He explained that he could not
furnish the plaintiff with any guarantees until the full R100 000,00
in respect
of the second transaction was paid into his trust account.
He conceded that both properties were registered in January and
February
2011 and that the plaintiff personally approached him in
relation to the cession. According to him the plaintiff should have
first
approached him as an attorney with the deed of sale and
establish if the funds were available. The plaintiff should have
obtained
the guarantees before he concluded the cession with the
second defendant. He informed the plaintiff that he could not issue
the
guarantees to him because the deposit was with the second
defendant and there was no money in his trust account for him to
issue
the guarantees. He proposed that the plaintiff should go to the
second defendant and make arrangements for the deposit to be paid
to
him so that he can then be able to furnish him with the guarantees.
He reiterated that the plaintiff should have first obtained
the
guarantees from him before he paid out the money to the second
defendant in terms of bridging finance. He contended that the
plaintiff should have first ensured that he was placed with funds
before he provided bridging finance. He was adamant that the
plaintiff should not have lent the money solely on a sale agreement.
He should have satisfied himself that the attorney was placed
with
funds.
[16]
Under cross-examination he conceded that he should have personally
ensured that the money to pay the commission was in his
trust account
and that he was in a position to pay it on registration of transfer
of the properties. He admitted that an attorney
who does not act with
the necessary care and skill, acts negligently and that the claim of
the plaintiff was a delictual claim
as the plaintiff suffered damages
as a result of his failure to pay him the commission as ceded to him.
He also agreed that the
claim was not based on contract. After being
referred to his firm's website indicating that his firm only handled
cases relating
to mergers, acquisitions, mining oil and gas,
pharmaceutical and health care, he stated that his wife bought the
website. He conceded
that it was a false misrepresentation to
advertise services he was not actually rendering on the website. He
admitted that upon
registration of the property the funds that were
paid to the Agent go to the seller who entrusts them with the
attorney and the
attorney has to ensure that upon registration the
money is utilised as per the seller's instructions. He also admitted
that as
a conveyancer, there are other parties who look upon him to
make payment and safeguard their funds including the estate agent who
is entitled to the commission. He did not dispute that the second
defendant ceded the commission payable to him upon registration,
to
the plaintiff and that the plaintiff therefore had the same rights as
those of the second defendant. The defendant further stated
that he
did not obtain any guarantee or undertaking from the second defendant
to pay the money which was in his trust account,
on registration. He
stated that the reason why he did not call for guarantees was because
he relied on a set off of the commission
with the deposit of the
purchase price that was paid directly in the second defendant's trust
account. He conceded that he could
not transfer funds he did not have
and that the commission was in terms of the cession only payable to
the plaintiff upon registration
of the properties and not the second
defendant. He conceded that notwithstanding that he had full
knowledge of the cession which
was sent to him through the e-mails
from the plaintiff, he proceeded to pay out the amount of R30 000,00
(commission in respect
of the first transaction) to the second
defendant and also set off the amount of R80 000,00, commission in
respect of the second
transaction against the deposit that he was
supposed to keep in his trust account until the date of registration
of the properties.
[17]
The appellant relies on the following grounds on appeal: He
challenges the trial court's finding that a negligent breach of
a
term of a contract on the part of a legal professional, gives rise to
a delictual claim. He contends that the court a
quo
erred in
finding that the Acquilian action has been extended to the duties
subsisting between the parties to a contract of professional
service
and that the cause of action for the respondent's claim being a
delictual claim based on the alleged negligence by an attorney
to
comply with a contractual term which caused pure economic loss, does
exist in our law. According to him the respondent did not
disclose a
cause of action, no causal link between the alleged negligent
behaviour and his conduct was established but despite
all this, the
trial court held that he was liable and granted judgment against him.
[18]
Counsel for the appellant referred the court to the case of
Lillicrap, Wassenaar
&
Partners v Pilkington Brothers
(SA) (Pty) Ltd
1985 (1) SA 475
(A) and submitted that it is trite
law that when pure economic loss is suffered as a result of an
omission or a failure by an individual
to comply with the terms of
the contract, the person who so suffers the loss has no claim in
delict against the party who so breached
the contract. He went on to
argue that this position does not only apply to cases where the
person who suffered the loss stood
in a direct contractual
relationship with each other, but, as stated in
Lillicrap, "these
considerations did not fall away
as a
result of the contracts
being assigned. The tripartite relationship between Pilkington,
Salanc (as main contractor) and Lillicrap
(as subcontractor) still
had its origin in contract. The only difference was that Pilkington
had now to follow the contractual
chain via Salanc to Lillicrap".
It was further pointed out on behalf of the appellant that a
failure to carry out an obligation in terms of the contract which
caused
pure economic loss is exactly what the respondent relies upon
in his alternative delictual claims and that the respondent's
alternative
claims do not disclose a cause of action in law.
[19]
It is my view that the facts in the Lillicrap matter are
distinguishable from the present set of facts. The plaintiff and the
defendant in the
Lilficrap
matter initially concluded a
contract between each other and the contract was thereafter
transferred to a third party unlike in
the present matter where the
plaintiff did not have any contract with the defendant. At p 496G the
court in the
Lillicrap
matter made the following remarks:
" There is no
objection in principle in our law to recognise that
a
party
may institute
a
claim for damages based on contract and delict
in the alternative and
a
party can then choose which one of
the two he wants to purse."
[20]
The following was said in
Holtzhauzen v Absa Bank Ltd
2008 (5)
SA 630
(SCA) at 633 with regard to the
Lillicrap
decision
supra:
"Lillicrap
decided that no claim is maintainable in delict where the negligence
relied on consist in the breach of
a
term of
a
contract
...
Lillicrap is not authority for the more general
proposition that an action cannot be brought in delict if
a
contractual claim is competent. On the contrary Grosskopff JA, was
at pains to emphasize (4960-1) that our
law acknowledges
a
concurrence of actions where the same set of facts can give rise
to
a
claim for damages in de/ict and in contract, and permits
the plaintiff in such
a
case to choose
which he wishes to
pursue."
[21]
From this reasoning it is clear that where the aggrieved party has
more than one remedy, nothing stops him from pursuing any
of them.
[22]
Reliance by the appellant on the
Lillicrap
matter and the
contention that no cause of action was disclosed in the present
matter loses sight of what was stated in paragraphs
20, 21, 22 and
31, 32 and 33 of the plaintiff's particulars of claim. Without
repeating para [7]
supra
dealing with these paragraphs, I
would like in particular to refer to para [22] (the alternative to
claim 1) which is the same as
para [33] (the alternative to claim 2).
It reads:
"As
a
result
of the breach of the legal duty
and
the first
defendant's contractual obligations, the Plaintiff suffered damages
equal to the amount that the Plaintiff should
have received in
the amount of ..."
(my emphasis)
[23]
It is evident from paragraphs 22 and 33 of the plaintiff's
particulars of claim that the plaintiff did not solely rely on breach
of the defendant's terms of the contract in relation to the deeds of
sale of the two immovable properties. The plaintiff relied
on breach
of the defendant's legal duty as a conveyancer as explained by Mr
Schalk van der Merwe in para 3 of his expert notice,
which evidence
the defendant did not contest and his contractual obligations. It was
clear from Mr Schalk van der Merwe's evidence
that the plaintiff
could rely in his delictual claim on the duty of care that the
defendant had towards the parties to the conveyancing
transaction to
properly attend to the finances of
the
transaction. Such a duty can be seen in the following light as
expressed by Neethling and others in Neethling et al:The Law
of
Delict, 5th editition pg 63:
"
Sometimes the
person's occupation or office he holds places
a
legal duty
upon him to conduct himself in
a
particular manner in relation
to the public or certain people."
The
following examples were given:
Liquidators
in Macadania Finance Ltd v De Wet
1991 (4) SA 273
(T); the Registrar
of Deeds in the Cape of Good Hope Bank v Fischer [1986)
4 SC
368.
[24]
The defendant never disputed that while he was well aware of the
cession between the plaintiff and the second defendant, he
proceeded
to pay the R30 000,00 in respect of the first transaction to the
second defendant and that as at that time the amount
was no longer
due to the second defendant because of the cession. He also did not
dispute that while he was well aware of the cession
between the
plaintiff and the second defendant, he did not ensure that on
registration of transfer of the property there was sufficient
money
to pay the plaintiff. He did not dispute that despite all this, he
proceeded to set off the amount payable to the plaintiff
as
commission against the deposits held by the second defendant. He
conceded under extensive cross-examination that he was negligent
in
not calling for guarantees or undertakings as a professional who had
a duty of care to all other interested parties in the transaction
to
ensure that on registration of transfer there are sufficient funds
for him to exercise his client's mandate. He ignored
the
cession as sent to him by the plaintiff and failed to respond to the
correspondence from the plaintiff. He also did not make
sure that the
deposits paid into the second defendant's account were transferred to
his account for him to utilise them on registration
of transfer of
the properties.
[25]
It is therefore my view under the circumstances that the reliance by
the defendant on the
Lillicrap
matter is misplaced for the
reasons advanced above.
[26]
The court in Jowell v Bramwell-Jones
1998 (1) SA 836
(W) at 894-895
said the following:
"It was also
submitted that the professional services of the fifth and sixth
defendants as attorneys were governed by a mandate
which derived from
contract and could or ought not fairly to be extended to the
delictual sphere. The fact that the duty imposed
on an attorney to
exercise due skill and care in the conduct
of
his
client's affairs give rise upon breach
to an action on
contract ... is, in my view,
by no means decisive of the rights of
a
third party
who
sues an attorney in delict for damages arising from negligence in the
performance of his mandate. It is merely one feather in
the overall
balance of the policy considerations which one must achieve in
determining whether wrongfulness exist or not ... I
agree that there
is no conceptual obstacle in our law to an attorney being held liable
in delict to
a
non-client for damages caused by negligence
..."
[27]
While it is apparent from the pleadings that the issue raised on
appeal did not feature anywhere and that it was only canvassed
during
the closing arguments at the court below, I felt prudent to deal with
it and lay it to rest. The defendant did not challenge
the plaintiff
s case at the trial court. He conceded that he was negligent in the
conduct of his duties as a conveyancer. The argument
advanced by him
that the plaintiff is without a remedy where he has conceded that his
negligence has resulted in the pure economic
loss suffered by the
plaintiff is without merit. I also do not agree that the cause of
action for the delictual claims has not
been established as alluded
to by the defendant. The findings of the court below are justified
given the evidence. I cannot therefore
find any misdirection on the
part of the court a
quo.
[26]
I am therefore persuaded that this appeal has no merit. It is
therefore bound to fail.
[27]
In the result I make the following order:
27.1. The appeal is
dismissed with costs.
______________________
M
J TEFFO
JUDGE
OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
I
agree:
_____________________
S A THOBANE
ACTING
JUDGE OF THE HIGH COURT OF SOUTH AFRICA
GAUTENG
DIVISION, PRETORIA
FOR
THE APPELLANT W W GIBBS
INSTRUCTED
BY
VAN HUYSSTEENS COMMERCIAL ATTORNEYS
FOR THE RESPONDENT
J E FERREIRA
INSTRUCTED
BY
B BEZUIDENHOUT INC
DATE
OF JUDGMENT 10 JUNE 2016