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[2015] ZAKZPHC 47
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Haig Farming (Pty) Ltd v E.G Elliot Estate CC (14175/2013) [2015] ZAKZPHC 47 (2 October 2015)
IN
HIGH COURT OF SOUTH AFRICA
KWAZULU-NATAL
LOCAL DIVISION, PIETERMARITZBURG
CASE
NO: 14175/2013
DATE:
02 OCTOBER 2015
HAIG
FARMING (PTY)
LTD
.............................................................................................
PLAINTIFF
And
E.G.
ELLIOT REAL ESTATE
CC
.................................................................................
DEFENDANT
JUDGEMENT
Delivered:
02 October 2015
MBATHA
J
[1]
The Plaintiff is Haigh Farming (PTY) Ltd, a company with limited
liability duly incorporated and registered in accordance with
the
Company Laws of the Republic of South Africa, having its principal
place of business at Glendower Farm, Mt Currie District,
Kokstad.
It is duly represented by Brad Haigh in these proceedings.
[2]
The Defendant is E.G. Elliot Real Estate CC, a Close Corporation
registered in accordance with the Close Corporation Act
[1]
,
and having its principal place of business at 90 Main Street,
Kokstad.
[3]
Mr Brad Haigh gave evidence on behalf of the Plaintiff. The
Defendant called Ken Roswell, Mark Errol Elliot and Mr Stoffberg
as
witnesses on behalf of the Defendant.
[4]
There are two (2) issues which need to be determined by this Court:-
a)
Whether there was a contract between the
Plaintiff and the Defendant or not or whether the contract was
between Mr Brad Haigh personally
and the Defendant; and
b)
Whether the Plaintiff had rendered
consultancy services to the Defendant or as contended to by the
Defendant, if Mr Haigh was employed
as an estate agent for the
Defendant.
[5]
In summary, the Plaintiff’s case is as follows:
It
had entered into an oral agreement with the Defendant on or about
July 2008. The terms of the agreement were that the Plaintiff
would provide consultancy services in respect of various agricultural
properties that had been listed with the Defendant.
The
Defendant would pay the Plaintiff a consultancy fee in respect of any
consultancy services rendered by the Plaintiff in respect
of such
properties. It would also pay a “spotting” or
“listing” fee in respect of properties that
had been
referred by the Plaintiff to the Defendant and in respect of which a
successful sale had been concluded.
Pursuant
to the said agreement, the Plaintiff rendered the consultancy
services in respect of the “Von Pletzen” property
and
listed the “Stockowners” building with the Defendant.
The two (2) properties were subsequently sold by the
Defendant and
the Defendant received commission in respect of the two (2) sales.
The
Defendant, though admitting the conclusion of the oral agreement,
contends that such agreement was concluded between the Defendant
and
Mr Brad Haigh personally, in that Mr Haigh would perform the services
of an estate agent. It further contends that Mr
Haigh would be
remunerated in the event of him being responsible for concluding the
sale of a property or listing a property in
respect of which a sale
was subsequently concluded by the Defendant. It is the
Defendant’s contention that in the absence
of a Fidelity Fund
Certificate, Mr Haigh was not entitled to any remuneration; therefore
his claim should be dismissed with costs.
[6]
The Plaintiff’s evidence is that he has always been involved in
various agricultural activities, as a result thereto,
Mr Elliot
sought to use his expertise in the sale of agricultural properties.
His expertise related to beef farming, grain
farming, milling, cane
farming, dairy farming and other related activities. He
assisted whoever was interested in purchasing
agricultural properties
which are often commercial in nature, in that he had to establish the
viability of the property in question,
liaise with Eskom or the
Municipalities in regulating that person’s business and assist
in getting them the necessary finance
to purchase the property and
continue with the business venture. Having done all that, he
would refer them to the Defendant,
who would process the sale. As a
result of this he would be entitled to a consultancy fee.
Similarly,
the same had happened with the Von Pletzen property and the
Stockowners property which he had “spotted” for
the
Defendant. It was his evidence that if he came across a
property or somebody who wanted to sell a property he will
bring it
to the attention of Mr Elliott. Mr Elliot would list the
property and if sold, he would be paid the spotting fee.
The
relationship lasted a number of years, but it went sour after the Von
Pletzen property deal had been finalised and he had listed
with the
Defendant the Stockowners property. In the Von Pletzen property
deal, he had done consultancy work, amongst other
things; he assisted
with the business plan, arranged quotas with Dairybelle as the
purchaser had decided to embark on dairy farming
and assisted with
getting finance for him from Ithala Bank for funding of the entire
venture. Having finalised all that,
he emailed both seller and
purchaser and stated as follows:
“
I
must hand the baton over the Mark and withdraw from this matter with
immediate effect.”
The
sale did not immediately realise, because of Vat issues in respect of
the member or director of the company. Later on
an addendum to
the agreement substituting one of the companies of the purchaser was
signed. The Plaintiff contention is that
though the addendum
was signed when he no longer had a relationship with the Defendant,
the consultancy work was done by him and
he was still entitled to his
consultancy fee of 50%.
7.1
The Defendant has raised a special plea, stating that at all material
times, Mr Brad Haigh acted
as an estate agent as contemplated in the
Estate Agency Affairs Act
[2]
(the Act), that such services were performed in the absence of a
Fidelity Fund Certificate as contemplated in the Act, as a result
thereof, even if the Plaintiff proved that it performed such acts, it
was not entitled to a commission.
7.2
The Defendant referred this Court to the definition of the estate
agent as stated in Section 1
of the Act and other provisions of the
Act that it relies upon. It reads 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 canvass a seller or purchaser
therefor; or
ii)
lets or hires or publicly exhibits for hire immovable property or any
business undertaking or negotiates in connection therewith
or
canvasses or undertakes or offers to canvass a lessee or lessor
therefor; or
(b)(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.
(c)
for purposes of sections 7, 8, 9, 12, 15, 16, 18, 19, 21, 26, 27, 30,
33 and 34B, 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;
…”
The
Court was also referred to
Section 26
of the
Act, which reads as follows:-
“
(1)
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 that corporation.”
And
Section 34A
of the Act, which reads as follows:-
“
(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.”
7.3
The Defendant contends that the prohibition does not apply only to an
estate agent but also to
its employees as contemplated in Section 34A
and relies also on the full bench decision of the Eastern Cape High
Court in
Warren
Jack Property Brokers cc t/a Warren Jack Property Group and Another v
Rodney David Venter
[3]
.
7.4
Besides considering whether the Plaintiff was in breach of the
provisions of the Act, this Court has to decide whether the Plaintiff
has been successful on a balance of probabilities in proving that he
rendered consultancy services to the Respondent. I will
look at
both these issues conjunctively as they are interlinked to each
other.
[8]
In dealing with the issue whether the Plaintiff was an estate agent,
I have looked at the Warren Jack Property case that I have
been
referred to by Counsel for the Defendant and found that it has
different facts to the case before me. It related to
the
Plaintiff who had been employed as “a candidate estate agent
entitled to earn commission”, who was not in possession
of a
Fidelity Fund Certificate. He had entered into a fee sharing
agreement with the Defendant, which postulated into a partnership
between the parties. In conducting the business, they met at
the office each morning where they worked through loads of documents
at their disposal and they planned their day. They travelled
together for meetings and appointments with clients, listing
new
properties in pursuit of their business as estate agents.
In
this case, there was no such arrangement at all. There is no
evidence before this Court that indicates that Mr Haigh was
employed
by the Defendant. That he went to their offices to work, used
their resources and planned with Mr Elliot.
The gist of the
matter in the Warren Jack’s case is that the Plaintiff was
working under the Defendant without a Fidelity
Fund Certificate in
his own office. The Plaintiff in that case was a representative
of the Defendant.
The
Plaintiff in that case fell within the definition of an estate agent
as envisaged in paragraph C (ii) of the Act. Therefore
in terms
of Section 26 of the Act read with Section 34A of the Act, he would
not have been entitled to remuneration without being
in possession of
a Fidelity Fund Certificate. See
Ronstan
Investments (PTY) LTD and Another v Littlewood
[4]
.
Therefore listing in the context of the facts of the Warren decision
case, was in breach of the provisions of the Act.
In this case
the scenario is completely different.
8.1
In this case nothing suggests that Mr Haigh was employed by the
Defendant in any capacity.
There is no evidence before this
Court that indicates that the managing director of the Plaintiff was
employed, either in the provision
of resources to market the
products, like a motor vehicle or motor vehicle expenses, telephone
allowance or any other disbursement.
It is clear that the
Plaintiff bore all costs relating to the consultancy work relating to
the property that was sold by the Defendant.
The consultancy
services rendered by the Plaintiff were not the effective cause of
the sale, but were
sui generis
in nature and ancillary to the
sale agreements that followed.
Mr
Haigh mentioned a few deals that the Plaintiff had been previously
paid for, including the Fondant Investment CC deal, the Chatweel
Milling CC deal, the Venter and Briggs deal, and the Bokkie de Bruyn
deal. These deals go back as far as 2008. In each
deal a
50% fee would be worked out for the Plaintiff by the daughter of Mr
Elliot and he would be requested to invoice them for
the agreed fee
and Vat. This is not consistent with the contention that Mr
Haigh was an employee of the Defendant who operated
without a
Fidelity Fund Certificate.
8.2
Mr Haigh described to the Court how the Plaintiff got the properties
that were listed with the
Defendant. It is his evidence that if
he came across properties or somebody gave him a property that they
wanted to sell,
he will bring it to the attention of E.G. Elliott,
where they will list it and he would get what is called a “spotters
fee”.
8.3
The payments were made to the Plaintiff and they were paid with Vat
and not to Mr Haigh.
Mr Haigh in his personal capacity was not
registered as a Vat vendor, but his company. At no stage, had
Mr Haigh been challenged
why the invoices were in the name of the
Plaintiff and not in his name. At one stage he was told to
invoice Fantique Trading
CC for the payment of a consultancy fee
relating to a listing of the farm of Mr Bokkie de Bruyn. An
employee cannot be paid
by another consortium that he does not work
for. The invoices reflected that they were payments for
consultancy fees and
not for commission. This was never
challenged by the Defendant. The same applied to Ken Roswell, a
witness called by
the Defendant; his invoices reflected that they
were for services rendered not for commission. This is an
indication that
the Defendant had various contractual relationships
with various persons that it was associated with. At all times,
the other
agents of the Defendant were in possession of the Fidelity
Fund Certificates and it cannot be accepted that the Defendant made
an exception of the Plaintiff only or as it alleges Mr Haigh to
operate without a Fidelity Fund Certificate.
8.4
Now, when the Plaintiff made a demand for fees in respect of the Von
Pletzen deal and the Stockowners
listing, the Defendant has raised a
special plea that he is not entitled to fees as he performed the
services of an estate agent
without being in possession of a Fidelity
Fund Certificate. This has never been raised before by the
Defendant, who previously
paid the Plaintiff its consultancy fees
without fail. It transpired during the trial when Mr Haigh gave
evidence that at
one stage the Defendant required the Plaintiff to
apply for a Fidelity Fund Certificate, as there were certain grey
areas that
they were not certain of. An application was lodged and
the Board requested a certified copy of his identity book. This
never
came to his attention, as the letter had been sent to the
Defendant’s address. The issue was never raised again
with
him, which meant that the Plaintiff was never an agent for the
Defendant.
8.5
Mr Elliot has not given any explanation to this Court, why only one
person would work for him
for so many years without being in
possession of a Fidelity Fund Certificate. His evidence was
that he introduced him in
the East Griqualand Advertiser in 2008, as
having joined his employment. He could not provide any
explanation why he has
not produced any other evidence that would
show that Mr Haigh was an employee of his company. Mr Haigh did
not put any adverts
in the newspaper, but they were put by the
members of the Elliot family, though those adverts made reference to
him. He could
also not explain why he accepted invoices that
reflected that these were consultancy fees, and why they were paid to
a company
and not Mr Haigh in his personal capacity. Mr Elliot
tried to suggest that they could have been forged, as he had not seen
them before, but this was not his defence. It is also unlikely
that throughout all the past years he never had access to
the books
of his company.
8.6
It is my view that Mr Elliot found it very convenient for him to rely
on this defence having acknowledged
that the Plaintiff was entitled
to its fee. Mark Elliot had acknowledged that Mr Haigh was entitled
to his fee, though he referred
to it as commission. This was in
response to a letter written to the Defendant o the 18
th
of December 2009 in the Plaintiff’s letterhead. On the
Von Pletzen deal, Mr Haigh has shown how he assisted the parties
with
the business plans, how he arranged quotas with Dairybelle for Mr
Mfingwane, how he assisted with finding finance from the
Ithala bank
and other issues that he assisted with to bring the deal into
fruition. Having finalised all that heavy spade
work in an
email to both seller and purchaser, he categorically stated as
follows:-
“
I
must hand the baton over to Mark and withdraw from this matter with
immediate effect.”
This
says it all. This could not have been written by an agent.
It categorically defines the relationship which the
Plaintiff had
with the Defendant. Whether an addendum to the sale agreement
was signed later on, it was still on the same
terms as previously
negotiated and brought into fruition by the Plaintiff.
8.7
Mark Elliot also stated that he did not pay the Plaintiff for the
listing of the Stockowners’
property because he did not have a
Fidelity Fund Certificate, but he did not explain why he had paid for
the previous listings.
If he believed that he was acting in his
personal capacity, he could have produced some kind of documents
relating to employment
of Mr Haigh as an employer, or showed that he
never claimed any Vat refunds regarding payments made to the
Plaintiff.
[9]
I accept the submission made on behalf of the Plaintiff that the
prohibition on remuneration as envisaged in Section 34A of
the Act
[5]
is not “a blanket prohibition”, but one “in respect
of or arising from the performance by such person of any
act”
of selling or purchasing immovable property or letting or hiring of
immovable property. The question here being
whether the
Plaintiff acted as an estate agent in respect of the two (2)
properties forming the subject of this action. In
far as the
Stockowners’ property is concerned, as submitted on behalf of
the Plaintiff, the supplying of a listing is not
defined as an act
performed by an estate agent in the definition of an agent and the
Plaintiff would therefore not be barred from
receiving any
remuneration in supplying the identity of the immovable property
which was up for sale to the Defendant or referring
the seller to the
Defendant.
[10]
It is clear from the evidence in this trial that at all times, Mr
Brad Haigh represented the company. The invoices which
were
submitted were made with the knowledge of those who represented the
Defendant and they were in the name of the Plaintiff.
I cannot
accept it to be the truth that throughout all these years that Mr
Elliot never saw a single invoice from the Plaintiff.
The
invoices attracted Vat and Mr Haigh’s evidence is that he is
not registered as a Vat vendor in his personal capacity.
The
evidence given by the Plaintiff is not only from Mr Haigh, but the
Plaintiff has put up documentary proof by way of invoices
and
payments made by the Defendant into its bank account.
Similarly, the Defendant’s witness, Mr Ken Rosewall, has
also
confirmed that he was paid through a Close Corporation. All
this evidence was not disputed by the Defendant. I
have
attached more weight to the documentary evidence furnished by the
Plaintiff in this case, than the lack of such documentary
proof from
the Defendant. He has not produced any documentary proof
substantiating that Mr Brad Haigh was a contracting party
with the
Defendant. There was only one listing of a residential
property, which should be treated as an exception, as it
was the only
one. It does not indicate that he was involved in the sale of
residential properties as well.
[11]
The Plaintiff’s evidence is supported by the various deals that
were previously concluded in the same fashion as the
Von Pletzen and
Stockowners deals. The Defendant only had to deal with the sale
of the properties.
[12]
I accept that the Plaintiff knew who it was contracting with and also
knew the nature of the services that were rendered by
the Plaintiff.
The evidence also shows that the Von Pletzen property, which is the
subject matter of this action and the
listing of the Stockowners’
property were concluded before termination of the relationship
between the parties, therefore
the Plaintiff is entitled to its fees.
[13]
Mr Haigh’s evidence cannot be challenged on the issue of
credibility as his evidence is supported by documentary evidence;
unlike Mr Elliot’s which is supported by none. Mr Haigh gave
evidence in a clear and forthright manner. Mr Elliot tried
to
be matter of fact like when giving evidence. He had not
acknowledged that he had duty that those working under him as
estate
agents ought to have been in possession of a Fidelity Fund
Certificates. Whilst conceding that the deal had been brought
about through the consultancy efforts of the Plaintiff, his evidence
was that he did not pay him since he did not have a Fidelity
Fund
Certificate. A defence, which I find to be opportunistic but
which he could not support with evidence. He could
not produce
a shred of evidence that Mr Haigh was an employee of his company.
[14]
The Plaintiff has successfully proved that it was a contracting
party, that Mr Haigh was not in the employment of the Defendant
and
did not act as an agent of the Defendant. The Plaintiff also
succeeds in its claims for fees in the Von Pletzen and the
Stockowners deals. I therefore make the following order.
a)
The Defendant is ordered to pay the
Plaintiff the sum of R303 525.00;
b)
Interest
a
tempora morae
from the date of judgment
to the date of payment thereof.
c)
Costs are awarded in favour of the
Plaintiff.
MBATHA
J
Date
of hearing : 29 July 2015
Date
delivered : 02 October 2015
Appearances
:
For
the Applicant : Adv. I.P Topping SC
Instructed
by : Goodrickes Attorneys c/o Venn Nemeth & Hart
Pietermaritzburg
For
the Respondents : Adv. A.J. Boulle
Instructed
by : Geyser Du Toit Louw & Kitching Inc.
Pinetown
[1]
Act
69 f 1984.
[2]
Act
112 of 1676.
[3]
(CA
156/2011) [2012] ZAECGH 59 (27July 2012) .
[4]
2001
(3) SA 555 (SCA).
[5]
Act
112 of 1976.