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[2012] ZAKZDHC 53
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Clayton v Auction Alliance and Another (974/2006) [2012] ZAKZDHC 53 (19 September 2012)
In
the KwaZulu-Natal High Court, Durban
Republic
of South Africa
Case
No : 974/2006
In
the matter between :
Peter
Clayton
.
.......................................................................................................
Plaintiff
and
Auction
Alliance
........................................................................................
First
Defendant
Dr
Ashwin Valjee, Sheila Devi Valjee NNO
(in
their capacity as trustees of the Ashwin Valjee
Family
Trust Trust No IT303/950)
.....................................................
Second
Defendants
Judgment
Lopes J
[1] In this matter the plaintiff
originally sought an order declaring an agreement of sale of
immovable property to be cancelled,
and for the return of a deposit
paid by the plaintiff to the first defendant of R90 000.
[2] The history of the matter may be
summarised as follows :
on the 27
th
October 2005
the plaintiff attended a public auction which was being conducted by
the first defendant;
at the auction the plaintiff bid on
an immovable property described as the sectional title unit 26
Davelain situated at 652 Ridge
Road, Musgrave, Durban;
the immovable property in question
was owned by a family trust represented by the second defendants;
the immovable property was sold at
the auction to the plaintiff for his bid of R760 000;
the plaintiff paid a ‘deposit’
of R90 000;
the sale was thereafter cancelled;
the plaintiff alleged in his
particulars of claim that he cancelled the sale as a result of
misrepresentations by the first defendant,
and in the circumstances
is entitled to the return of the R90 000, which he paid as a
‘deposit’.
[3] The action came to trial which
commenced on the 6
th
December 2010 before the late Msimang
JP. The evidence was not completed within the time allotted, and the
matter was adjourned
sine die. Unfortunately, and before the trial
could resume, Msimang JP passed away.
[4] The matter then came before me on
the 5
th
September 2012. No evidence was led and I heard
argument on the matter. The parties were agreed that in reaching a
conclusion I
could have recourse to the record of proceedings before
the late Msimang JP and that the record handed to me was an accurate
record
of what was said at the trial.
[5] The original case brought by the
plaintiff however, was overtaken by events. Those events were that a
subsequent purchaser had
been found for the property and an agreement
was concluded with that purchaser, one Soni, on the 30
th
January 2006. The plaintiff, in the circumstances, no longer
persisted with the allegations of a fraudulent representation
entitling
it to cancel the sale agreement. He merely relied upon the
fact that the contract was cancelled entitling him, so he alleged, to
repayment of the ‘deposit’. As a result of the subsequent
sale of the property the second defendants fell out of the
picture
and were not before me. The issue which arises is one solely between
the plaintiff and the first defendant, to whom I shall
hereinafter
refer as the defendant.
[6] It follows from the aforegoing,
that as the plaintiff no longer relies upon a fraudulent
misrepresentation, and as the parties
are agreed that the sale
agreement was cancelled, it is no longer in dispute that the
defendant properly exercised its functions
as auctioneer in
concluding the sale on behalf of the plaintiff.
[7] I have referred thus far to the
‘deposit’ paid by the plaintiff. I emphasised the word
deposit because the payment
made by the plaintiff is the main subject
of the dispute between the parties. They are not agreed on what the
payment constituted,
or in respect of what it was made.
[8] At the outset of the hearing the
defendant was asked to admit the allegations in the amended
sub-paragraphs 16.1, 16.2 and 16.3
of the plaintiff’s amended
particulars of claim. It is accordingly relevant to record the
contents of the sub-paragraphs
which were the subject of the request.
They are as follows :
‘
During
January 2006 :-
the Second Defendant
expressly, alternatively tacitly, accepted the cancellation of the
agreement, alternatively, unilaterally
cancelled the agreement;
the aforesaid
cancellation took place pursuant to a written communication between
the First Defendant and the Second Defendant,
a copy of which is
annexed hereto, marked “
AA
” and was confirmed in
writing by way of letter dated the 30 October 2009 from the Second
Defendant’s attorneys
to the Plaintiff’s attorneys, a
copy of which is annexed hereto, marked “
BB
”;
acting in accordance
with the said cancellation of the agreement, the Second Defendant
thereafter sold and transferred the property
to a third party;’
[9] Those sub-paragraphs referred to
the cancellation of the sale agreement. What the defendant recorded
as its response to the
request was the following :
‘
(a)
It is admitted that the second defendant tacitly accepted that the
agreement was cancelled.
(b) The allegations made
in 16.1 contrary to the above admission, are not admitted.
(c) The allegations made
in 16.2 and 16.3 are admitted.’
[10] The plaintiff’s case was
simply that the agreement having been cancelled, the deposit paid of
R90 000 fell to be returned
to it by the first defendant. In support
of this contention Mr
Phillips
who appeared for the plaintiff
referred me to sub-paragraph 8(c) of the particulars of claim which
read :
‘
(c)
Pursuant thereto the Plaintiff :
signed an agreement for
the purchase of the said unit for R760 000;
(ii) paid to the First
Defendant a deposit of R90 000.’
In its plea the defendant admitted the
allegations in sub-paragraph 8(c).
[11] Mr
Phillips
referred me to
the defendant’s plea which denied any liability to repay the
deposit, and referred to Clause 3 and 5 of the
written sale
agreement, concluded at the auction sale between the plaintiff and
the erstwhile second defendants represented by
the defendant.
[12] Clause 3.1 and 3.2 of the
agreement refer to the way in which the purchase price of the
property is to be paid, including a
deposit of 5% of the purchase
price, which is to be paid to the auctioneer by the purchaser
immediately on the fall of the hammer.
[13] Clause 5 provides :
‘
5.
AUCTIONEER’S
COMMISSION
The PURCHASER shall be
liable for and pay, in addition to the amounts payable in terms of
Clauses 3.1 and 3.2, AUCTIONEER’S
commission of 10% (ten
percent) of the purchase price, plus VAT thereon, which commission
shall be deemed to have been earned and
is payable immediately upon
the fall of the hammer.’
[14] Mr
Phillips
submits that
these clauses entitle the defendant to no more than a contractual
entitlement to claim commission. As there is no
counter-claim for
commission, the defendant is obliged to return the deposit in toto to
the plaintiff. As support for the plaintiff’s
claim Mr
Phillips
also referred me to the trial bundle which formed Exhibit A at the
hearing before the late Msimang JP. The relevant correspondence
may
be summarised as follows :
on the 22
nd
October 2009
the plaintiff’s attorneys addressed the defendant’s
attorney regarding inter alia the following :
“
You
have undertaken to confirm with your client that it currently holds
the full R90 000 in a trust account, and to provide us with
documentary proof of this. ...’ ;
(b) the defendant’s attorney
eventually replied on the 29
th
October 2009 stating the
following :
‘
Attached*hereto
is a document evidencing that our client received the R90 000. Our
client has advised us that it still holds such
funds in trust to
date. Please indicate whether or not you will require us to formally
discover this document.’
(c) attached to the letter was an
extract of the defendant’s trust account reflecting two
deposits by the plaintiff, one on
the 27
th
October 2005 in
the sum of R45 000 and the second on the 28
th
October
2005, also in the sum of R45 000.
[15] At the resumed Rule 37 conference
held on the 31
st
July 2012, and in response to a request
that the defendant confirm that it had re-instated into trust the
funds referred to in
the letter of the 29
th
October 2009,
the defendant recorded:
‘
The
Mooney Ford letter of 29 October 2009 incorrectly states that the
funds were then held in trust. The funds were transferred
from the
First Defendant’s ABSA trust account to its KZN Nedbank
business account on the 29
th
June
2006 and from that account to its KZN Nedbank call account on the 3
rd
July
2006 where it has been ring fenced (sic) and is being kept pending
the finalisation of this action.’
Mr
Phillips
also referred me to
the plaintiff’s replication which dealt with the entitlement of
the defendant to claim the auctioneer’s
commission referred to
in paragraph 5 of the sale agreement. The replication was to the
effect that no member of the defendant
was in possession of a
Fidelity Fund certificate as required by an estate agent, and
accordingly could not claim the amount.
[16] Mr
Phillips
also referred
me to a letter forming Annexure ‘AA’ to the plaintiff’s
particulars of claim which was addressed
by the defendant to the
seller’s attorney, one Rabiah Motala, containing the following
:
‘
...
Kindly be advised that we will refund the purchaser all monies he has
paid at the first sale. If we take legal action the property
cannot
be sold until it is resolved in the Court of Law.
Auction Alliance
commission in this matter is R43 895 however we are willing to
compromise and refund you R3 859 towards the electrical
and borer
certificate costs.’
[17] On the 30
th
October
2009 and as per Annexure ‘BB’ to the plaintiff’s
particulars of claim, Rabiah Motala replied on behalf
of the
erstwhile second defendant as follows :
‘
...
Our client has no objection to any monies being held by Auction
Alliance, being released to the Plaintiff, Peter Clayton.’
Mr
Phillips
also referred me to
an affidavit deposed to by the defendant’s director, one
Hendrik Vorster Hattingh (‘Hattingh’)
dated the 5
th
November 2009 which affidavit was deposed to in an application for
leave to amend the defendant’s plea. In paragraph 16 of
that
affidavit Hattingh sought to justify a basis for an amendment to the
plea explaining the make-up of the R90 000 deposited
by the
plaintiff. I was informed that the defendant did not proceed with the
application.
[18] During the argument, I asked Mr
Phillips
what the amount of R90 000 had been paid in respect
of, because it did not appear to bear any resemblance to the amounts
which
became payable on the fall of the hammer, in respect of both
the 5% deposit calculated on the purchase price and/or the 10%
commission.
The response of Mr
Phillips
was that in the
absence of any evidence I was bound by the pleadings in the matter.
With regard to the question of commission,
Mr
Phillips
submitted that as the R90 000 had been allegedly appropriated by the
defendant, it had to establish an entitlement to do so in
terms of
the Estate Agency Affairs Act, 1976, of which s 34(A) requires the
existence of a valid fidelity fund certificate, which
has been issued
to the estate agent concerned, or if the estate agency is a company,
to every director of the company.
[19] In addition to deciding whether
the R90 000 constituted a deposit on the purchase price only, and
accordingly whether the plaintiff
was entitled to the return of that
amount on the basis that the agreement of sale had been cancelled, Mr
Phillips
contended that I was required to answer two questions
:
(a) whether the agreement, allegedly
constituted by the letters exchanged between the defendant and Rabiah
Motala, constituted an
agreement of waiver or abandonment of the
defendant’s claim for commission; and
(b) even if there was evidence of an
appropriation of the monies, if that was contrary to or in breach of
the undertaking that the
monies were held in trust and/or ringfenced,
whether it is appropriate for the appropriation of the monies to be
ignored and/or
reversed by me.
[20] With regard to the onus of
establishing the above, Mr
Phillips
contended that, but for
the pleadings, the plaintiff would have borne the onus of
establishing the contents of the deposit, but
because the payment of
the R90 000 had been admitted as a ‘deposit’ the onus was
discharged.
[21] Mr
Troskie
SC who appeared
for the defendant submitted that the explanation for the makeup of
the R90 000 ‘deposit’ is to be found
in the evidence of
the plaintiff which was given before the late Msimang JP. That
evidence appears at pages 86 ff of the record
(which I was only given
and able to read, after the plaintiff’s counsel had addressed
me) and I summarise it as follows :
the plaintiff admitted that upon the
fall of the hammer he had an obligation to pay a deposit towards the
purchase price and the
auctioneer’s commission;
the auctioneer’s commission was
earned and became payable immediately upon the fall of the hammer;
immediately after the auction he was
taken into an office and given an invoice;
the invoice, which was numbered 216,
and which appeared at page 73 of the trial bundle recorded that the
plaintiff was liable
to pay the following :
R C
‘
5%
Deposit 38 000 00
10% auctioneers comm 76
000 00
14% vat on auctioneers
comm 10 640 00
Total payable 124 640 00’
At the top of the invoice the
following was recorded in manuscript :
‘
27/10
– 45 000 – EFT
28/10 – 45 000 –
EFT
29/10 – 31 640
124 640;
The plaintiff then left the venue in
possession of the invoice knowing that he had to effect payment of
the amounts reflected
therein, and how these amounts were made up;
The lady with whom he had dealt had
written out the three payments recorded at the top of the invoice in
manuscript. The plaintiff
confirmed that he had indicated to the
defendant’s representatives that he could pay no more than R45
000 on each day because
he had a limit on withdrawals from his
account;
the plaintiff clearly understood when
he paid the two amounts of R45 000 that he was making payments in
respect of the invoice.
This was made clear from the ‘Internet
Banking Proof of Payment’ documents produced under discovery
by the plaintiff
which stated the following
‘
Reference
on beneficiary statement :
clayton
– inv216
’
Despite the apparent desire of the
plaintiff not to admit that these payments were made pursuant to the
invoice, there can be absolutely
no doubt that that was what he did;
(h) the plaintiff then declined to
make what was the third and final payment of R34 640 and decided to
cancel the sale agreement.
[22] Mr
Phillips
submitted that
the defendant was bound by the pleadings. The plaintiff had alleged
that it had paid a ‘deposit’ of
R90 000, and that was
admitted by the defendant. That was an end to it, and the defendant
was not entitled to go beyond the pleadings.
Mr
Phillips
may
well be correct that if an allegation of fact is made in a
particulars of claim and admitted by the defendant, that the
defendant
is not entitled, without the consent of the plaintiff, to
lead evidence at variance with the admission. The defendant in those
circumstances would be required to withdraw the admission prior to
doing so. It may also be correct that the plaintiff, having made
an
allegation in the summons, is not entitled without the consent of the
defendant, to lead evidence at variance with the allegations
of fact
in the particulars of claim, because that is where the plaintiff sets
out its case which the defendant is required to meet.
[23] The present case, however, is
different. Here the plaintiff made an allegation of fact and the
defendant admitted it. When
the evidence was led at the trial the
plaintiff himself contradicted the allegation of fact which he had
made regarding the ‘deposit’.
I say ‘contradicted’
because Mr
Phillips
contended for a technical definition of
‘deposit’ averring that it could only possibly refer to a
portion of the purchase
price paid. The problem with that submission
is that the plaintiff himself made it absolutely clear in his
evidence what he was
paying and why he paid it. I mention here that
the evidence included the fact that after the plaintiff had paid the
first two amounts
he refused to pay the last amount (the balance of
the invoice) because of alleged misrepresentations by the defendant.
Those misrepresentations
did not form any part of the hearing before
me and were not relied upon by the plaintiff.
[24] In the circumstances, and having
led evidence contrary to an allegation of fact in the particulars of
claim, without demur
on the part of the defendant (who in fact
encouraged and exploited that contradiction in cross-examination, as
it was entitled
to do), the plaintiff cannot now complain of
prejudice when the defendant seeks to place reliance on the
plaintiff’s evidence.
This evidence, after all, did not emanate
from the defendant.
See
:
E C Chenia & Sons
CC v Lamé & van Blerk
[2006] ZASCA 10
;
2006 (4) SA 574
(SCA),
paragraphs 13 – 15.
[25] It would surely be unrealistic
were I to ignore the evidence of the plaintiff as to what he did when
his evidence was so clear,
and so clearly contradicts the argument
put forward that the word ‘deposit’ in the particulars of
claim can only possibly
refer to a portion of the purchase price. The
evidence demonstrates that what he paid was part of the invoice,
constituted of two
parts, a 5% deposit of the purchase price and the
10% auctioneer’s commission plus VAT, both of which became
payable upon
the fall of the hammer at the auction. Significantly,
his payments gave no indication of the items in respect of which the
R90
000 was paid. I accordingly find that there is no merit in the
submission that the admission of sub-paragraph 8(c) of the
particulars
of claim bound the defendant as to what was actually paid
by the plaintiff.
[26] As pointed out by Mr
Troskie
SC the defendant was entitled, in the absence of any stipulation by
the plaintiff, to apportion the amount paid to it by the plaintiff
as
it saw fit. The evidence of Mr Hattingh at the hearing before the
late Msimang JP was that although the R90 000 was originally
deposited into the defendant’s trust account, it was
transferred to a Nedbank call account which was the defendant’s
business account. The money was transferred out of the defendant’s
trust account during July 2006, a fact established by
Hattingh from
the documents
See
:
Durban City Council v
Glenore Supermarket and Café
1981 (1) SA 470
(D) at 480 A
– D.
[27] Mr
Phillips
submitted that
the evidence of Hattingh should not be accepted because it was
hearsay. In addition, the cross-examination of Hattingh
was not
completed. I am inclined to accept the evidence of Hattingh. I say
this because there was every available opportunity to
the plaintiff
to establish, by way of the discovery of the defendant’s bank
accounts, precisely what happened to the R90
000 and when it was
transferred from the defendant’s trust account. The right to do
that persisted after the hearing before
the late Msimang JP and if
the plaintiff made no effort to establish the accuracy of what
Hattingh said, then I am prepared to
accept his evidence. In this
regard I am not placing any onus whatsoever on the plaintiff. All I
am saying is that there was evidence
before the court of the transfer
of the monies out of the trust account, and it has not been
challenged by contrary evidence.
[28] Mr
Phillips
also submitted
that the defendant was bound, by what he referred to as the
undertakings contained in the letters which were annexures
to the
particulars of claim. In particular he refers to the letter from the
defendant dated the 24
th
January 2006 addressed to Rabiah
Motala, the attorney for the erstwhile second defendants. The
statement that ‘
We will refund the purchaser all
monies he has paid at the first sale
’ is not an
undertaking which was given to the plaintiff. Nor does it appear to
be an agreement binding upon the defendant
which can be relied upon
by the plaintiff. It was no more than a statement by the defendant to
the sellers that it would repay
to the purchaser all the monies due
to it. The reaction of the sellers is simply that they have no
objection to the monies held
by the defendant being paid over to the
plaintiff.
[29] Mr
Phillips
further
pointed to the fact that the defendant’s attorneys advised the
plaintiff’s attorneys that the monies were held
in trust as at
the 29
th
October 2009 and indeed enclosed a copy of the
trust account reflecting that fact. Mr
Phillips
also referred
to the resumed pre-trial conference at which the defendant’s
attorneys recorded that the money had been ‘ringfenced
and is
being kept pending the finalisation of this action.’
[30] I do not believe that the
incorrect information given by the defendant’s attorneys to the
plaintiff’s attorneys
as to the whereabouts of the R90 000 can
change the factual position. The factual position, as seems clear
from the evidence, is
that the money was appropriated by the
defendant and transferred to the defendant’s business account.
The fact that it has
been ‘ringfenced’ cannot assist the
plaintiff unless I were to find that it is entitled to the return of
the money.
[31] In view of the fact that the
payment was made in accordance with the invoice and that the
defendant was entitled to apportion
it as it deemed fit, and as the
defendant apportioned it firstly as to auctioneer’s commission
and then to a deposit, the
plaintiff only has an entitlement to the
monies to the extent that it exceeds the auctioneer’s
commission.
[32] With regard to the fact that the
defendant is required to establish that its representatives held
fidelity fund certificates
in order to comply with the provisions of
s 34 (A) of the Estate Agency Affairs Act 1976, as I have accepted
the evidence that
the defendant appropriated the money, the plaintiff
has no cause of action to claim that money back.
See
:
Taljaard v T L Botha
Properties
[2008] ZASCA 38
;
2008 (6) SA 207
(SCA) at 209 D – G.
[33] In all the circumstances I am
satisfied that the plaintiff has only established a case for the
return of R3 360 being that
portion of the R90 000 which represented
a payment of part of the deposit on the purchase price.
[34] With regard to the question of
costs, and prior to the hearing before the late Msimang JP, the
defendant made two tenders :
on the 1
st
October 2010 a
tender of R90 000 was rejected by the plaintiff because it did not
include interest and costs;
the defendant also tendered to pay
the R3 360 together with interest and the plaintiff’s costs on
a Magistrates’ Court
scale.
Both those tenders were rejected. As
both tenders were rejected by the plaintiff, with regard to the
question of costs it only has
itself to blame for continuing the
litigation.
[35] In the circumstances I make the
following order :
The defendant is directed to pay to
the plaintiff the sum of R3 360 together with interest thereon
calculated at the rate of
15.5% per annum from the date of the
service of the summons in the action to date of payment;
The plaintiff is to pay the
defendant’s costs of suit.
Date of hearing : 5
th
September 2012
Date of judgment : 19
th
September 2012
Counsel for the Plaintiff : D Phillips
(instructed by Barkers Attorneys)
Counsel for the First Defendant : A J
Troskie SC (instructed by Mooney Ford Attorneys)