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[2013] ZAKZDHC 71
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Wakefields Real Estate (Pty) Ltd v Baboolal and Another (9167/07) [2013] ZAKZDHC 71 (22 February 2013)
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IN
THE KWAZULU-NATAL HIGH COURT, DURBAN
REPUBLIC
OF SOUTH AFRICA
CASE
NO: 9167/07
In
the matter between:
WAKEFIELDS
REAL ESTATE
(PTY)LTD
..............................................................
Plaintiff
Versus
TIMAL
BABOOLAL
.....................................................................................
First
Defendant
BHANUMATHI
BABOOLAL
...................................................................
Second
Defendant
JUDGMENT
Delivered:
22 January 2013
MBATHA
J
[1]
The Plaintiff is Wakefields Real Estate (PTY) Limited, a company duly
registered and incorporated in accordance with The Laws
of the
Republic of South Africa, carrying on business as Wakefields Estate
Agents and has its principal place of business at 105
Essenwood Road
Durban, KwaZulu-Natal.
[2]
The Defendants are Timal Baboolal and Bhanumathi Baboolal, who both
reside at No.[...] C[...] C[...], U[...] R[...]. They are
cited
herein as the First and Second Defendants respectively, jointly and
severally the one paying the other to be absolved.
[3]
The Plaintiff is claiming a sum of R384 750.00 together with interest
thereon
a tempore morae
from the date of transfer, being, the 15
th
of January 2007 to date of payment and costs of suit.
The
Plaintiff’s claim arises from a claim for commission arising
from the sale of the property for R4,5 million belonging
to the
Defendants.
[4]
The Plaintiff claims that one of its agents, Ms Helena Real, was the
effective cause of the sale and therefore entitled to commission.
The
Defendants’ dispute that the Plaintiff is entitled to
commission on the basis that it failed to bring the sale into
fruition
and was therefore not entitled to any commission. It
is their evidence that it was Tuscany Real Estates that concluded the
sale with Mr and Mrs Rangappa and Tuscany was therefore entitled to
commission.
[5]
The following issues are common cause:
5.1
That the Plaintiff has complied with the provisions of the Estate
Agency Affairs Act 112 of 1976. That it has a valid Fidelity
Fund
Certificate in terms of section 26 (1) of Act 112 of 1976, as
amended.
5.2
It is also common cause that the Plaintiff was given a sole and
exclusive mandate by the Defendants starting from the 3
rd
of May 2006 to the 22
nd
of May 2006.
5.3
That during the period of the sole mandate the Rangappas were
introduced to the Defendants. Their offer to purchase was accepted
on
the 3
rd
of May 2006 by the Defendants subject to a
suspensive condition which lapsed after the expiry of a ninety (90)
day period.
5.4
It is also common cause that the offer lapsed when the suspensive
condition was not fulfilled.
5.5
It is also common cause that Tuscany made an offer to the Defendants
on the 21
st
of August 2006 on behalf of the Rangappas for the purchase price of
R4,5 million, which they accepted. The property was subsequently
transferred and registered to the Rangappas on the 15
th
of January 2007.
[6]
It is important at this stage that I summarise the facts of this
case, so as to be able to highlight where the dispute lies.
As
of the 3
rd
of May 2006 the Plaintiff was given a sole and exclusive mandate by
the Defendants. This mandate was to end on the 22
nd
of May 2006. The agent for the Plaintiff, one Ms Helena Real,
introduced the Rangappas to this property situated at No.13
Canterbury
Crescent, Umhlanga Ridge, KwaZulu-Natal. The property was
for sale for R5,2 million. An offer of R4,7 million was accepted by
the
Defendants, but it was subject to a suspensive condition, which
had to be fulfilled within a ninety day period. The sale failed
as
the suspensive condition remained unfulfilled.
After
the lapse of the mandate, the property remained on the market and it
was still being marketed by the Plaintiff. The Defendants
were also
approached by one Ms Wilson, an agent for Tuscany, to market their
property. Tuscany advertised the property and was
approached by Mrs
Rangappa to make an offer to the Defendants for the sum of R4,5
million. This offer was accepted by the Defendants
and the property
was subsequently transferred to the Rangappas. Tuscany was paid
commission for the sale of the property.
[7]
The main issue, amongst others, to be decided by this Court is
whether the Plaintiff was the effective cause of the sale. This
is a
factual issue, which can be determined by the evaluation of the
evidence presented to this Court.
8.1
The terms of the sole and exclusive mandate given to the Plaintiff to
sell the property as of the 3
rd
of May 2006 are relevant
to the determination of the issues before this Court. The
Plaintiff was given a mandate starting
from the 3
rd
of May
2006 and ending on the 22
nd
of May 2006 to sell the
property for R5,2 million or
such a lesser amount as the seller
may be prepared to accept
(my underlining).
8.2
The Defendants undertook to pay the Plaintiff a commission of 7.5%
plus VAT thereon calculated on the purchase price accepted
by the
seller during the currency of the agreement.
8.3
Such commission was also payable by the seller in the event that the
sale of the property would occur within a period of thirty
(30) days
after the termination of the agreement (whether by effluxion of time
or otherwise) to a person who was introduced during
the mandate
period to the seller or
the property as
a potential purchaser thereof by Wakefields or any third party or
after the expiry of a period of thirty (30) days
after such
termination and Wakefields was the effective cause of the sale
(my underlining). The terms of the sole and exclusive mandate appear
in Exhibit “A”.
[9]
It is common cause that on the very same day of obtaining the
mandate, Ms Real submitted an offer by the Rangappas for the purchase
price of R4,7 million. It was accepted by the Defendants subject to a
suspensive condition that the Rangappas will sell their immovable
property at No.5 Taunton Place, Summerset Park, within a period of
ninety (90) days from the date of the acceptance of the offer
being
the 3
rd
of May 2006. It was the intention of the Rangappas that from the
proceeds of the sale of their immovable property a sum of R3,4
million would be paid towards the purchase price of the immovable
property sold by the Defendants. ABSA bank had also pre-approved
a
mortgage loan in their favour totalling a sum of R1 333 856,12.
[10]
The Rangappas kept in touch with Ms Real in a quest to get the
property that they were very keen on. It was the evidence of
Mrs
Rangappa that they came up with various proposals to Ms Real, who
remained adamant that the Defendants would not accept a reduced
offer. This led them to approaching Tuscany who had also advertised
this property at a later stage.
[11]
It is submitted on behalf of the Defendants that the Plaintiff had
failed to introduce a buyer that was able financially and
legally to
purchase the immovable property from the Defendants. It is further
submitted that the Rangappas were unable for financial
reasons to
purchase the property during the sole and exclusive mandate.
[12]
It was submitted on behalf of the Defendants that the Plaintiff did
not fulfil the mandate as it did not bring a purchaser
for the sum of
5,2 million rand as required by the Defendants. The mandate
stated categorically that “or such a lesser
amount as the
seller may be prepared to accept”. The mandate was signed
by the Defendants and is self explanatory as
it appears where I have
underlined above in this judgment.
EVALUATION
OF EVIDENCE AND APPLICATION OF THE LAW
[13]
It is important to note that the property was finally bought by the
very same Rangappas who had made an offer during the subsistence
of
the exclusive and sole mandate held by the Plaintiff. The Rangappas
had means to purchase the property including the pre-approved
mortgage loan and a property of value to realise. Their failure to
sell within the ninety (90) day period cannot be interpreted
to mean
that they were not financially in a position to purchase the
property.
[14]
If the premises are sold to a willing and able purchaser and the
agent was the effective cause of the sale, he/she is entitled
to
commission. The actual sale can take place at a later stage, for
instance, in a case where the agent introduces a tenant who
later on
exercises his right pre-emption incorporated in the lease agreement
to purchase the very same property such an agent would
be entitled to
commission as long as the Court accepts that he/she was the effective
cause of the sale.
[15]
This cannot be seen in isolation. The agent is entitled to commission
if he/she introduced a purchaser who is able legally
and financially
to purchase the property and such an introduction leads to the
conclusion of an effective sale as held in
Selman
Properties 112
(PTY)LTD
[1]
.
[16]
The mere fact that their offer was accepted subject to the sale of
their property is indicative of financial means and that
the
Defendants accepted that they had a valuable asset capable of
realisation. It would have been a completely different scenario
had
they only qualified for R1,3 million loan only.
[17]
In
Aida
Real Estate Ltd v Lipsichtz
[2]
the
Court held that the agent who brought the seller and the purchaser
together was the effective cause of the sale, though the
purchaser
had to overcome certain financial obstacles.
[18]
Further, the mandate given to the Plaintiff was to introduce a
purchaser for the sum of R5,2 million or such a lesser amount
as the
seller may be prepared to accept. I accept that our case law has
established the following principle:
“
That
if the agent introduces a person who negotiates with the principal
and, because of the introduction and negotiations the seller
agrees
to accept a lower price, the agent is nevertheless entitled to
commission notwithstanding the failure to carry out the original
mandate.”
The
aforementioned principles appear in
Doyle
v Gibbon
[3]
and
Burt
v Ryan
[4]
.
Also in
Le
Grange v Metter
[5]
at 80 De Velliers JP held as follows:
“…
a
broker or other selling agent (in the abscence of any argument to the
contrary) been held repeatedly to be 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 after
his active efforts have ceased 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]
The ability to purchase does not depend whether the purchaser has
money in hand nor does it depend on whether the purchaser
has a
binding agreement in terms of which a third person is obliged to
provide him or her with resources to carry out the contract,
as
stated in
James
v Smith
[6]
and
Gluckman
v
Landau
and Co
.
[7]
.
[20]
A purchasers’ ability to pay must be assessed at the time of
signing the agreement as held in
Beckwith
v Foundation Investment Co.
[8]
.
I therefore find that the submission made on behalf of the Defendants
that the Rangappas when introduced to the Defendants were
not legally
and financially able to purchase the property to be without merit.
[21]
I must also determine if the Plaintiff was the effective case of the
sale. The Defendant’s evidence and submission is
that the sale
took place after the expiry of the sole and exclusive mandate,
therefore the Plaintiff was not the effective cause
of the sale. This
is a question of fact and the onus is on the Plaintiff to prove that
they were the effective cause of the sale.
[22]
Ms Real dealt with the Defendant’s property whilst at Acutts.
Upon joining the Plaintiff’s agency she found the
same property
on the Plaintiff’s marketing list and continued to market it.
As from September 2005 she actively marketed
the property by holding
four (4) or five (5) show houses and took prospective buyers the
property at various intervals to the property.
I consider her actions
to be aggressive marketing and indicate her intention to market the
property as speedily as possible.
[23]
It was both the evidence of Ms Real and Mrs Rangappa that she fell in
love with the property for the first time that she saw
it. She also
took her again to see the property with her husband and family. This
is supported by evidence before this Court indicating
that the
Rangappas attended one of her show houses. Ms Real took her for a
detailed tour of the property. This is clear from the
offer of
purchase, that indeed she had been taken through the property, she
pointed out the repairs that she wanted to be effected
on the
property. Such issues can be raised when a person has a keen interest
on the property and has had ample of opportunity to
tour the property
to see such defects.
[24]
The introduction to the property was formalised by the offer in
writing. It was also Mrs Rangappa’s evidence that
she
tried to persuade the Defendants through Ms Real to reduce the
purchase price as she would also have done likewise in respect
of her
own property that she was selling. It was Mrs Rangappa’s
evidence that she remained keen on the property even
after the lapse
of the ninety (90) days period and kept in touch with Ms Real.
[25]
The Rangappas approached Tuscany after it advertised the property.
There is no evidence before this Court which indicates any
form of
aggressive marketing by Tuscany or more than the once off
advertising. Tuscany is approached by the purchaser who has been
dealing with another agent for quite some time and who was introduced
to the very same property by another agent.
25.1
It is also Mrs Rangappa’s evidence
that she saw the property again only after signing the offer to
purchase with Tuscany.
The offer to purchase was signed o the 26
th
of August 2006 and the suspensive condition lapsed in respect of the
previous offer on the 3
rd
of August 2006. This was within the same month, that the Rangappas
made an offer through Tuscany to the Defendants.
25.2
I must therefore consider if the intervention of Tuscany at that
stage was weighty enough not to make the Plaintiff the effective
cause of the sale. It is quite clear from what I have highlighted
above that the intervention of Tuscany was not weighty enough
to make
it the effective cause of the sale. It is the agent who is the
effective cause of the sale that is entitled to commission
and not
necessarily the agent who introduces the purchaser, as held in
Eschini
v Jones
[9]
.
25.2
In the same case it was further held that the
sine
qua
non of the sum of the causes may be
said to be the effective cause of the sale. A long break after the
first introduction may indicate
a new mandate if resumed by another
agent. This was not the case here, as the suspensive conditions
lapsed on the 3
rd
of August 2006 and the offer was made on the 26
th
of August 2006. It is also the evidence of Mrs Rangappa that
when she saw the advert by Tuscany she immediately contacted
Ms Real
and tried to persuade her to make an offer of R4,5 million to the
Defendants. This is an indication that the Plaintiff
was still
in the picture and was considered in all respects to be the agent for
the property. She indicated that the Defendants
were still keen
on a higher purchase price, which was not unusual in the light that
the Defendants had previously taken the property
off the market,
revamped it and returned it back to the market with the intention of
getting a better return.
[26]
The evidence presented before me proves on a balance of probabilities
that the Plaintiff was the effective cause of the sale
as the
Rangappas were willing and able to buy on the seller’s
conditions and that the sale was bound to have gone through
independently of any negotiations conducted by another agent, as was
held in the Eschini case mentioned above.
[27]
There is a difference between full and substantial performance. If an
agent introduces a person who negotiates a lower rate
the principal
accepts it, the agent is still entitled to commission. In this case,
the terms of the mandate to Wakefields include
the acceptance of a
lesser amount.
[28]
Where there are competing agents, it is the agent who is the
effective cause of the sale that is entitled to commission and
not
necessarily the agent who introduces the purchaser as held in the
Eschini
v Jones judgment
[10]
.
Our Courts hold the view that the first introduction is the decisive
factor, particularly when nothing intervenes between the
time of the
introduction to the time of the sale. A long break after the first
mandate may indicate a new mandate if returned by
another agent. I
find that there was no break at all in this case. This sale could
have gone through without the intervention of
Tuscany. There were in
fact no negotiations by Tuscany save to submit the offer to the
Defendants.
[29]
Here we have the classical scenario of the principal preventing the
agent from earning the commission. It is trite law that
when an
estate agent has done his or her mandate, but the principal through
his own fault fails to take the benefits of the agents
service or
refuses to allow the agent is nevertheless entitled to commission as
held in
Consolidated
Estates and Trusts Ltd v Turnbull
[11]
.
29.1
The principal first independently marketed the property, took it off
the market as it did not give them the desired financial
result.
He revamped the property and put it back on the market. The
only agent who is mentioned and who marketed the
property extensively
was Ms Real. She was astute to realise that she has a
financially and legally competent purchaser in
the Rangappas and
sought a sole and exclusive mandate from the principal. Ms
Reals’ evidence is that the principal
would not accept an offer
to R4,5 million as he had rejected such an offer from another
prospective buyer. She had been told
not to waste their time,
which is dismissive. It was only upon a presentation of a lower
offer by a different agent that
he realised that Ms Real had not been
wasting his time, this is the one and only offer that he has on the
table. I accept
that he had indeed rejected the reduced offers,
as he had to consult his family before eventually accepting the
reduced offer.
Had the Defendants not have pushed aside the
offers proposed by the Plaintiff, it is clear that the property would
have been sold
by the Plaintiff.
[30]
The Plaintiff has discharged the onus that she was the effective
cause of the sale irrespective of the dismissive attitude
of the
principal and that this was so irrespective of the intervention by
Tuscany. I accept that the Plaintiff has successfully
proved that the
effects of her introduction continued right up to the time of
purchase, irrespective that it was affected after
the termination of
her sole and exclusive mandate. The degree of her efforts should be
taken into account as well.
[31]
The submissions made by the Defendants as to the unreliability of her
evidence are rejected and contradictions made by Ms Real
are very
minor, and have no effect on her entire testimony. She gave her
evidence clearly and in a sincere manner. I find her to
be a credible
witness.
[32]
Her counterpart, Ms Wilson, was selective in her evidence. It is not
probable that she has completely forgotten whose board
was on the
property of the Defendants. I find that she was fully aware of the
consequences of her actions, hence her covering up
that she sought
legal advise. Her actions were opportunistic in nature.
Irrespective
of Mrs Rangappa’s evidence emphasising that Ms Real refused to
take her offer of R4,5 million to the Defendants,
I still find that
the evidence presented before me by the Plaintiff was the effective
cause of the sale.
[33]
The Supreme Court of Appeal in
Wakefields
Real Estate v Attre
[12]
dealt with the issues whether an estate agent who introduces a
purchaser to a property where a sale is concluded through another
agent is the effective cause of the sale and entitled to commission.
This supports the Plaintiff’s case as that case
deals with the
same issues raised in this matter.
[32]
Similarly, in
Aida
Real Estate Ltd v Lipsichtz
[13]
the Court held that the agent who brought the seller and the
purchaser together was the effective cause of the sale; this was a
purchaser who had to overcome certain financial obstacles. In
this case there were no financial hurdles, as the Rangappas
were on a
good legal and financial standing.
[34]
Even though an agent is paid by good intentions or even hard work, it
is still a factual issue. In this case, the results
were
prevented by the dismissive attitude of the Defendants and the
Tuscany agent who had realised that she was not the effective
cause
of the sale, but still went ahead to finalise the deal.
[35]
I therefore find in favour of the Plaintiff.
I
make the following order:
(a)
The First and Second Defendants are ordered to pay the Plaintiff the
sum of R384 750.00, together with interest at the rate
of 15,5% p.a
from the date of transfer, being the 15
th
of January 2007 to date of payment, jointly and severally, the one
paying the other to be absolved;
(b)
Cost of suit on a party and party scale.
MBATHA
J
Date
of hearing: 05 October 2011
Date
of judgment: 22 January 2013
Counsel
for the Plaintiff: Advocate D.W Finnigan
Instructed
by: Meumann White Attorneys
2
nd
Floor, Wakefield House
150
Steven Dlamini (Essenwood) Road
DURBAN
Counsel
for the Defendant: Advocate M.S Khan
Instructed
by: Naidoo & Company Inc.
5
Pencarrow Park, Armstrong Avenue
La
Lucia
[1]
2006
(1) All SA 545 (C).
[2]
1971
(3) SA 871 (W)
[3]
1919
TPD 220
[4]
1926
TPD 682.
[5]
1925
OPD 76
[6]
1931
KB 317
[7]
1944
TPD 261
[8]
1961
(4) SA 510 (A) 513.
[9]
1929
CPD 18 29.
[10]
1929
CPD 18 29
[11]
1924
TPD 1 6
[12]
(666/10)
[2011] ZASCA 160
[13]
1971
(3) SA 871
(W)