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[2015] ZAECELLC 1
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Roux and Another v Magnolia Ridge Properties 197 (Pty) Ltd (EL556/2012, ECD1256/2012) [2015] ZAECELLC 1 (3 February 2015)
NOT
REPORTABLE
IN
THE HIGH COURT OF SOUTH AFRICA
EAST
CAPE LOCAL DIVISION, EAST LONDON
Case
no: EL556/2012
ECD
1256/2012
In
the matter between:
KEVIN
GLYNN ROUX and
ELIZABETH
VAN
NIEROP
..............................................................................................
Plaintiff
vs
MAGNOLIA
RIDGE PROPERTIES 197 (PTY)
LTD
...............................................
Defendant
ZAMBLI
216 (PTY)
LTD
...........................................................................................
Third
Party
Date
Heard : 9 -11 December 2013; 28 July 2014; 15 September 2014
Date
Delivered : 3 February 2015
SUMMARY
: Plaintiff herein, an estate agent partnership represented by Colin
Roux (Roux) was given a mandate, which it accepted,
to find a
purchaser of defendant’s immovable property in East London for
the sum of R55 000 000.00 or at a sum
acceptable to
defendant.
After
Roux had completed its task, the property was sold by defendant to
Zambli 216 (Pty) Ltd (Zambli) in the sum of R52 000 000.00.
Defendant refused to pay plaintiff’s commission plus VAT
thereon on grounds, inter alia, that plaintiff was not responsible
for the introduction of the property to Zambli and, therefore, was
not the direct and effective cause of the sale.
Court
held that there is sufficient evidence mainly based on probabilities
to show that plaintiff has proved its case and therefore,
is entitled
to its commission plus VAT thereon. Defendant was ordered to
pay costs of the action.
JUDGMENT
TSHIKI
J:
A)
INTRODUCTION
[1]
The plaintiff herein is a partnership existing between
Kevin
Glynn Roux
and
Elizabeth
Johanna Van Nierop
who trade as estate
agents under the name and style
Kevin
Roux Properties
at 65 Beach Road,
Nahoon, East London. For the sake of convenience, the plaintiff
shall be referred to as
Roux
.
Defendant is
Magnolia Ridge Properties
197 (Pty) Ltd
a company with limited
liability and duly registered as such in accordance with the laws of
the Republic of South Africa with its
registered office at 80 Frere
Road, Vincent, East London. For the sake of convenience, unless
for the purpose of avoiding
confusion, defendant shall be referred to
as
Magnolia
.
The third party is Zambli 216 (Pty) Ltd the company which bought the
property in question from
Magnolia
.
The third party shall be referred to as
Zambli
.
[2]
It is common cause between the parties that at all material times
hereto
Roux
and
its partners were the holders of valid Fidelity Fund Certificates
issued in terms of section 26 of the Estate Agents Act 112
of 1976.
[3]
In his evidence,
Mr Roux
who
testified on behalf of the plaintiff, told the Court that on or about
August/September 2009 at East London defendant, represented
by its
Managing Agent and representative of its major shareholders,
Colin
Victor
, extended to plaintiff,
represented by
Kevin Glynn Roux
,
a mandate to find a purchaser of
Magnolia
’s
immovable property, Erf 16249, East London (the property) for the sum
of R55 000 000.00 or at a sum acceptable
to defendant.
[4]
Roux
testified
further that the implied terms of the mandate extended to
Roux
would be to pay to the plaintiff a commission equal to the generally
accepted rate of commission for selling a property of the
nature of
that owned by
Magnolia
in East London area. In addition, value added tax and
commission would be payable upon transfer of the property in
consequence
of a successful sale to a purchaser introduced by
Roux
.
The generally acceptable rate of commission for a property of the
nature of that then owned by
Magnolia
in East London area was 5% of the selling price.
[5]
According to
Mr Roux,
the
plaintiff accepted the defendant’s mandate. It is also
the evidence of
Roux
that
the latter introduced
Zambli 216 (Pty)
Ltd
to the property. As a direct
consequence of
Roux
’s
introduction of
Zambli 216 (Pty) Ltd
(hereinafter referred to as
Zambli
)
a written option for the purchase by
Zambli
of the property from
Magnolia
was concluded. This was followed
by a deed of sale inclusive of the clause entitling
Roux
to receive payment of commission in the
sum of one million rand plus value added tax (VAT) from
Magnolia
in the event that a sale followed. This written option to
purchase was marked “A”. Subsequently and on
the
1
st
February 2011,
Zambli
concluded
a further option for the purchase of the property from
Magnolia
whose copy is marked “B”. This also entitled
Roux
to receive payment of commission in the sum of R1 million plus VAT
from
Magnolia
in the event that a sale followed.
[6]
On the 31
st
January 2011 as well as on 1
st
February 2011
Magnolia
,
represented by
Warren Geyer
,
and plaintiff represented by
Roux,
orally agreed that in the event
of a successful sale of
Magnolia
’s
property to
Zambli,
defendant would pay to plaintiff a commission of R1 000 000.00
plus value added tax. On the 30
th
November 2011,
Magnolia
and
Zambli
concluded
an Agreement of Sale in terms thereof, defendant sold the property to
Zambli
for
the sum of R52 million rand exclusive of value added tax, a copy of
that agreement is marked as annexure “C”.
Zambli
r
eceived transfer of the property from
Magnolia
on the 11
th
May 2012 and the latter received payment of the agreed purchase
price. That then would have entitled
Roux
to be paid its commission together with value added tax thereof.
[7]
Magnolia
refused
to pay
Roux
its commission of R1 000 000.00, demand notwithstanding.
Its contention when refusing to pay the money being that
the option
agreement dated November 2010, annexure “A”, and the
option agreement dated 31
st
January 2011 marked “MRP1” to the defendant’s plea
lapsed on account of the failure by the prospective purchaser
to
fulfil the conditions precedent contained therein. Therefore,
according to
Magnolia
,
there was no Agreement of Sale resulted either from the options
marked “A” or “MRP1”. At the trial
it
contended that there is no term of any agreement relating to any
commission payable came into existence between the parties.
It
is the further contention of
Magnolia
that as a result of annexure “MRP2” a further written
Addendum to annexure “B” which was also amended,
Roux
played no role in the conclusion of that Deed of Sale dated the 30
th
November 2011 marked “B” to the particulars of claim.
Magnolia
consequently contended that
Roux
played no role in the negotiations of the further option agreement
signed by
Magnolia
and
Zambli
on
or after the 31
st
January 2011 inclusive of the agreement dated the 9
th
November 2011 and or the 30
th
November 2011 inclusive of the Addendum. For the above reasons,
Magnolia
contended
that it did not owe
Roux
any money and more so, according to
Magnolia
the two option agreements of November 2010 annexure “A”
and that of 31
st
January 2011 marked “MRP1” lapsed on account of the
failure by the prospective buyer to fulfil its conditions of the
agreement.
[8]
That the commission which would be paid to plaintiff is R1 000 000.00
is borne by the contents of the agreements which
were signed by the
defendant and the third party which reflects a sum of R1 000 000.00
to be paid to the plaintiff should
the sale succeeds. In my
view, if the plaintiff was not involved in this sale and was not the
effective decisive cause of
the sale, his name would never even for a
moment been reflected in no less than three option agreements
prepared by defendant’s
attorneys and signed by the defendant
which were marked “KRP14”. On clause 9 of “KRP14”,
plaintiff
is named as the agent who was entitled to a commission of
R1 000 000.00 payable to plaintiff by the seller. The
next offer to purchase signed by the defendant on 21
st
October 2011 was submitted by
Zambli
to
Magnolia
.
The terms thereof reflected that “
Kevin
Roux / Smada Investments
was to be paid
3% plus VAT. However, the offer was not accepted by the
defendant.
[9]
The next option agreements (annexures “KRP2”) dated the
15
th
November 2010, annexure “KRP3” dated the 18
th
November 2010 and annexure “KRP4” signed by
Zambli
on 31
st
January 2011 and by
Magnolia
on
the 1
st
February 2011 were concluded. All the annexures mentioned above
contained clauses reflecting that
Roux
would be entitled to the payment of the
commission by
Zambli
in
the sum of R1 000 000.00 (one million rand) plus VAT.
[10]
In November 2011 the sale of the property between
Magnolia
and
Zambli
was ultimately concluded with the purchase price
reflected in clause 9 being a sum of R52 000 000.00, and
the Deed of
Sale agreement is referred to as annexure “KRP5”.
What must have surprised
Roux
is clause 9 of that agreement
which reads:
“
The
purchaser warrants that a commission is payable to an estate agent,
including Kevin Roux Properties, in respect of the sale
and transfer
and indemnifies the seller against any claims for commission by any
estate agent or trader. In the event of
any claim being made
upon the seller for commission, then the purchaser shall be obliged
to settle or defend same and indemnify
the seller against the claim
and costs of defence as required by the seller from time to time.”
B)
REASONS FOR JUDGMENT
[11]
In the main the defendant’s denial of liability to the
plaintiff is that there was no mandate entered into between itself
and
Roux
.
It has denied that
Roux
has
introduced
Zambli
to the defendant and its property. Although it has admitted the
sale of the property to the third party, (
Zambli
)
it has vehemently denied that
Roux
was
the effective cause of the sale of the property between
Magnolia
and
Zambli.
[12]
In
National Employers’ General Insurance v Jagers
1984
(4) SA 437
(ECD), Eksteen AJP remarked as follows at 440 D:
“
It
seems to me, with respect, that in any civil case, as in any criminal
case, the onus can ordinarily only be discharged by adducing
credible
evidence to support the case of the party on whom the onus rests. In
a civil case the
onus
is obviously not as heavy as it is in a criminal case, but
nevertheless where the
onus
rests
on the plaintiff as in the present case, and where there are two
mutually destructive stories, he can only succeed if he (
or
she
) satisfies the Court on a
preponderance of probabilities that his (
or
her
) version is true and accurate and
therefore acceptable, and that the other version advanced by the
defendant is therefore false
or mistaken and falls to be rejected. In
deciding whether that evidence is true or not the Court will weigh up
and test the plaintiff's
allegations against the general
probabilities. The estimate of the credibility of a witness will
therefore be inextricably bound
up with a consideration of the
probabilities of the case and, if the balance of probabilities
favours the plaintiff, then the Court
will accept his (
or
her
) version as being probably true. If
however the probabilities are evenly balanced in the sense that they
do not favour the plaintiff's
case any more than they do to the
defendant's, the plaintiff can only succeed if the Court nevertheless
believes him (
or her
)
and is satisfied that his (or her) evidence is true and that the
defendant's version is false …it is only where a consideration
of the probabilities fails to indicate where the truth probably lies,
that recourse is had to an estimate of relative credibility
apart
from the probabilities”. (My emphasis)
[13]
Therefore, the trial Court has to first consider whether on the
probabilities of the case the plaintiff is telling the truth
and
therefore, his or her version is acceptable. If that is
accomplished the trial Court need not have to make other
considerations.
The probabilities of the case are considered at
the same time when the credibility of the witnesses are evaluated by
the Court
and that process does not constitute separate fields of
enquiry as regards to the consideration of the truth by the plaintiff
and
the consideration of the probabilities.
[14]
The two main issues in the present case are whether or not the
plaintiff received a mandate from defendant to find a buyer
for the
latter’s property. Secondly, and if so, whether or not
the plaintiff was the effective cause of
Zambli’
s
purchase of defendant’s property. On the face of a denial
by the defendant that it had instructed the plaintiff to
act as its
estate agent the Court has to rely on the evidence that was adduced
before it, to establish whether or not the plaintiff
has discharged
its
onus
.
[15]
In the first place, and given the nature of
Roux
’s
profession who conducts himself as an estate agent and has been so
for some time, there can be no denial that he
was in fact
conducting a profession of an estate agent at the time when
Roux
is alleged to have been engaged by
Magnolia
to pursue his profession.
Roux
’s
name appears frequently as having been listed in numerous documents
filed by
Roux
where he is referred to as the estate agent in the sale in issue.
The amount which is referred to as his remuneration is
reflected in
such documents. In my view, it is unlikely that
Magnolia
would list the names and particulars of
Roux
if the latter was never engaged by
Magnolia
for that purpose. I refer to the documents such as annexure “A”
and “B”. In my view, it is
highly unlikely for
Magnolia
’s
attorneys to have drafted such contracts which nominate
Roux
as the estate agent in the document involving
Zambli
if
Magnolia
did
not consent to such transactions.
[16]
This is also the case with respect to exhibit “A112”
which was signed
by Mr Bassingthwaighte
on behalf of
Magnolia
. In their clause 11.4.2 of that document
Roux
is to be paid a commission of a sum of R1 000 000.00 plus
value added tax which amount is due by
Magnolia
. The
same applies to annexure “A4” exhibit and “A2”
which were produced by
Mr Owen Holland
of Business Partners
which was both a shareholder of defendant and its Property Managing
Agent.
Magnolia
’s witness
Bassingthwanghte
confirmed that he signed the agreement
exhibit “A112” knowing that it was “reflecting a
commission payable to
Kevin Roux
in the sum of R1 000 000.00
because that was the commission agreed upon
”.
Secondly, that the document was signed on behalf of
Zambli
and
that an agreement was concluded in its terms. Thirdly, that if
the transaction was successful the commission reflected
in the
agreement in clause 9 was payable by
Zambli.
Fourthly,
if the transaction went through defendant would have paid to
plaintiff R1 000 000.00 and
that he accepted that Roux
introduced Zambli to the property
. Further, and in his
evidence
Mr Bassingtwanghte
made the following admission which
was damaging to the defendant’s case:
“
Q:
And you have heard all the evidence and you have seen all the
documentation now that you say you are unaware of it at the time
and
you have seen his (Roux’s) involvement and his contact and his
introduction of the property and you have signed documentation
that
acknowledged that he was the effective cause of those earlier
agreements?
A:
Yes.
Q:
But you say he is not the effective cause of the last agreement?
A:
Yes.
Q:
Why?
A:
Because he is not the effective cause.
Q:
Why?
A:
Because he had nothing to do with the last sale agreement.”
[17]
It follows from the above answer that it does not make sense and does
not assist the defendant’s case instead it strengthens
the
evidence of the plaintiff. I say so, because the evidence
before this Court shows on a balance of probability that from
the day
when
Roux
introduced
Zambli
to
the property in issue until it was sold to
Zambli
there was no estate agent involved
other than the plaintiff. The parties remained the same and the
purchase price was much
the same although reduced at some stage and
the terms of the agreement remained much the same. In my view,
there was no other
effective cause of the earlier agreements other
than
Roux
and
it follows that in the absence of any other intervening estate agent
at any stage there could have been no other effective cause
of the
last agreement other than
Roux
.
At least there is no evidence led to the contrary.
[18]
There is no explanation from
Magnolia
or its witnesses why
Roux
was to be paid such amount if it had not carried out any mandate on
behalf of
Magnolia
.
It follows in my view, that the said amount must have been offered to
Roux
for a
specific purpose and in remuneration for services done on behalf of
Magnolia
which
is to introduce
Zambli
to
Magnolia
’s
property under discussion herein.
[19]
It also did not come as a coincidence to me that exhibit “A46”
which was signed by
Mr Geyer
on the 19
th
August 2011 was not signed on behalf of
Zambli
.
This is followed by a clause which provides for a no commission
payable to any estate agent which specifically excludes
Kevin
Roux Properties
from receiving any
commission from the seller of the property. The question to be
decided by this Court is whether
Magnolia
had any justification to refuse to pay
Roux
the
commission which he had been entitled to as recorded in the specified
agreements. The question that should be asked is,
if
Magnolia
was not satisfied that
Roux
had introduced
Zambli
to
Magnolia
’s
property, which was eventually sold with the help of
Roux
,
why would its name be written in those Deeds of Sale, or offers
to sale as the person to receive commission? There
is no answer
to this question.
[20]
In the circumstances of this case, it does not make sense that
Magnolia
could
justify its refusal to pay
Roux
of
its money for commission in circumstances where there had been
documents in the form of Deeds or offers of Sale after
Zambli
was introduced to
Magnolia
’s
property by
Roux
.
The facts presented by
Magnolia
do not support any other conclusion other than that
Roux
was unjustifiably deprived of its
commission plus VAT thereof. There was even no other estate
agent other than
Roux
that
was involved in the sale of the property in issue. The only
reason, in my view, is that
Roux
had already introduced
Zambli
to this property and nothing more was
necessary to be done other than to transfer the property. It is
also the reason why
a clause which excluded estate agents at that
stage being that
Roux c
ompleted
the task of introducing
Magnolia
’s
property to
Zambli
and
nothing more was to be done. On the evidence before me, I am
satisfied that
Roux
’s
introduction of the property in question to
Zambli
was the effective cause of the
successful sale by defendant of the property to
Zambli.
That is why, and for no other reason,
that the sale between
Magnolia
and
Zambli
was
successful. There cannot be any other reason.
[21]
Mr Holland
having been directly involved in this case and with his knowledge of
vital evidence
Magnolia
decided not to call
Mr Holland
as
a witness, notwithstanding that
Mr
Holland
was present in Court.
This, in my view, as
Mr De La Harpe
has submitted, leads to an irresistible inference
that the omission by
Magnolia
to call
Mr Holland
was
a deliberate act on the part of
Magnolia
because
Mr Holland
may not have been supportive of the defendant’s claim that he
had no authority to represent
Magnolia
despite him being a representative of its appointed Managing Agent.
Mr Bassingthwaighte
confirmed that
Mr Holland
was authorised to extend the mandate to
Roux
.
In fact,
Mr Victor
actually allowed
Roux
to show the property to
Zambli
.
[22]
According to
Roux
,
Magnolia
should have discovered e-mail correspondence between
Mr
Geyer
and
Mr
Bassingthwaighte
. This
information is relevant because
Mr
Victor
admitted sending some e-mails to
Mr Holland
and
those were exhibits “A1”, “A2”, “A3”
and “A4 on the 2
nd
September 2009. In those e-mails
Mr
Holland
revealed that “Kevin has
a buyer for Magnolia at R50m
…”
Mr
Holland
’s reply is “Kevin
can use this as a base
…”
This
correspondence was sent with a draft sale agreement which provided
for the payment of a commission to
Roux
in the sum of one million rand plus VAT which was payable by
Magnolia
.
As I have said
supra
,
this evidence is indicative of the fact that
Roux
was specifically engaged by
Magnolia
to carry out the mandate and as a consequence of which
Magnolia
sold and transferred its property to
Zambli
.
The sale was upon the terms acceptable to
Zambli
and
Magnolia
who
received payment of the purchase price in consequence of which
Magnolia
is liable to
Roux
for the payment of the commission.
[23]
It cannot be denied that
Roux
introduced
Zambli
to
the property. Even
Mr Victor
confirmed that
Mr Roux
showed
Mr Watkinson
the property by arrangement and also introduced
Zambli
to the building. This conclusion is supported by the evidence
of
Mr Bassingthwaighte
.
Even
Mr Victor
himself conceded that
Roux
played
an integral part which culminated in the signing of the various
agreements with
Zambli
.
[24]
It is inescapable that the defendant by its conduct decided to
sideline
Roux
with a view to deprive it of its entitlement in the sum which it has
claimed against
Magnolia
herein. Thereafter,
Roux
was excluded from receiving its commission and warranties even in
circumstances where the commission was earned by
Roux
.
Magnolia
intended to deprive
Roux
of its commission which was due to it immediately after the money for
the property was paid by
Zambli
.
[25]
Magnolia
’s allegation that
Roux
was not the
effective cause of the last agreement to
Zambli
property has
no substance at all. It does not make sense to me for the
defendant to refer to the events as:
[25.1] the
negotiation of the final agreement (exhibit “A170”;
[25.2] the
conclusion of the lease, exhibit “A172”;
[25.3] the
conclusion of the lease, exhibit “A139”; and
[25.4]
the compliance with the conditions precedent in the agreement of
sale.
[26]
The evidence I have already alluded to shows clearly that there is no
substance in
Magnolia
’s
allegations against
Roux
.
There can be no justification for such allegations because they have
not been proved. It is clear from the probabilities
of the case
that the defendant deliberately excluded the plaintiff from any
involvement in the conclusion of the final agreement
of sale.
This it did so purposefully and in circumstances which cannot be
justified.
[27]
On the probabilities alone the plaintiff’s version is more
probable than that of
Magnolia
.
It is clear from the evidence supported by the probabilities already
explained that
Magnolia
is not telling the truth. Its version cannot be believed.
[28]
Mr Cole
for the defendant sought to persuade this Court that
the plaintiff had no mandate and that in the absence of special
circumstances
an agent must prove the following:
a)
that which was to happen for commission to
be payable had happened - ie that he or she has introduced to
the seller a purchaser
who is willing and financially able to buy the
property;
b)
secondly, that he was the effective cause
of the sale.
[29]
For the reasons I have stated in my judgment, there is no substance
in the above submissions by
Mr Cole
and, therefore, they cannot succeed.
[30]
It follows that if the agent is the effective cause of the sale, the
estate agent is entitled to an agreed commission
or, if no
agreement has been reached as to the sum of that commission, to
the customary commission (
Van Heerden v Retief
1981
(1) SA 945
(A). Moreover, an Estate Agent’s contractual
relationship with his or her principal is like any other contractual
relationship
and is not entitled to special rules. Whether
the agent is entitled to the payment of commission will depend upon
what
was agreed between the parties. Where such a claim is
made, as was pointed out by Jenkins LJ in
Midgley’s Ltd v
Hand
[1952] 2 QB 452
(CA) at 435:
“
One
has to look out at the particular contract and see whether, according
to its terms construed in accordance with the ordinary
principles of
construction, the event has happened on the occurance of which the
commission is expressed to be payable.”
[31]
In order for an estate agent to be entitled to commission on the sale
of the property, the agent plaintiff must show that but
for his
introduction of the third party the sale of the property to the third
party would not have occurred and that it was his
introduction which
was the direct and effective cause of the sale and that the third
party was induced to buy defendant’s
property as a result of
that introduction (
Vanarthday (Edms)
Bpk v Roos
1979 (4) SA 1
(A)).
In the present case,
Roux
did
just that.[32] In
Lieb and Another
NNO v I Kuper & Co (Pty) Ltd
1982
(3) SA 708
(T) at 713 F-G it was held:
“
The
ordinary law of agency requires the agent's 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.”
[33]
Before I conclude, I need to comment on the contentions by
Magnolia
that there were intervening events in
the conclusion of the sale and lease agreements between
Roux
and
Magnolia
.
Evidence before Court supports the view that such interventions, if
any, occurred after
Roux
had performed and concluded his final and effective agreement.
Therefore, their occurance, if any, could not be used to deprive
Roux
of its entitlement to the commission
earned. I agree with
Mr De La
Harpe
in his submission that all those
occurances inclusive of all of them they do not apply in this case
and for the above reasons they
cannot be used to deprive
Roux
of its commission. In any event, they cannot amount to any
intervening act so as to deprive
Roux
of
its commission.
[34]
I therefore make the following order.
[34.1] Judgment is
hereby granted in favour of the plaintiff for the payment of:
[34.1.1] A sum of
R1 000 000.00 (one million rand) plus Value Added Tax
together with interest thereon calculated at the
legal rate per annum
from the 11
th
May 2012 (that being the date of transfer of
defendant’s property to Zambli and receipt by Zambli of the
purchase price of
R52 000 000.00) to date of payment.
[34.1.2] Defendant
is ordered to pay plaintiff’s costs of suit together with
interest thereon calculated at the legal rate
of interest per annum
from allocatur to date of payment such costs to include the
preparation of the heads of argument by plaintiff’s
counsel.
________________________
P.W. TSHIKI
JUDGE OF THE HIGH
COURT
Counsel
for the plaintiff : Adv. D. De La Harpe
Instructed
by : Bax Kaplan Inc
EAST
LONDON
Counsel
for the defendant: Adv. S. Cole
Instructed
by : Cooper Conroy Bell & Richards Inc
EAST
LONDON