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[2020] ZASCA 63
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Signature Real Estate (Pty) Ltd v Charles Edwards Properties and Others (415/2019) [2020] ZASCA 63; 2020 (6) SA 397 (SCA) (10 June 2020)
THE SUPREME COURT OF
APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case No: 415/2019
In the matter between:
SIGNATURE
REAL ESTATE
(PTY)
LTD
APPELLANT
and
CHARLES
EDWARDS PROPERTIES
FIRST
RESPONDENT
CHARLES
EDWARDS PROPERTIES CC
SECOND
RESPONDENT
ATLANTIC
SEABOARD REALTY (PTY) LTD THIRD
RESPONDENT
THE
ESTATE AGENCY AFFAIRS BOARD FOURTH
RESPONDENT
Neutral
citation:
Signature
Real Estate
(Pty)
Ltd
v
Charles Edwards
Properties
and Others
(415/2019)
[2020] ZASCA 63
(10 June 2020)
Coram:
NAVSA,
CACHALIA, DAMBUZA, MAKGOKA AND SCHIPPERS JJA
Heard:
The matter was
disposed of without an oral hearing in terms of s 19
(a)
of the
Superior Courts Act 10 of 2013
.
Delivered:
This
judgment was handed down electronically by circulation to the
parties’ representatives by email, and by publication on
the
Supreme Court of Appeal website and release to SAFLII. The time and
date for hand down is deemed to be 10h00 on the 10
th
day of June 2020.
Summary:
Estate
Agent – entitlement to claim commission – application of
ss 34A and 26 of
the
Estate Agency Affairs Act 112 of 1976
–
whether
estate agent in possession of a fidelity fund certificate which
erroneously described the estate agent
was
precluded by s 34A from claiming commission.
ORDER
On
appeal from:
Western
Cape Division of the High Court, Cape Town (D M Davis AJ sitting
as court of first instance):
The
appeal is upheld. The order of the court a quo is set aside and
replaced with the following:
‘
1.
The third respondent (Atlantic Seaboard Realty (Pty) Ltd) is ordered
to pay the applicant:
1.1
the
amount of R13 440;
1.2
interest
on the above amount at the prescribed rate from 13 June 2018 to date
of payment; and
1.3
the
applicant’s costs, including the costs reserved on 17 July
2018.’
JUDGMENT
Makgoka
JA (
Navsa,
Cachalia, Dambuza and Schippers JJA
concurring)
[1]
Section
34A of the Estate Agency Affairs Act 112 of 1976 (the Act) precludes
an estate agent from claiming commission when, at the
time the
commission was earned, the estate agent had not been issued with a
valid fidelity fund certificate by the regulatory statutory
body, the
Estate Agency Affairs Board (the Board), the fourth respondent.
[2]
In
this case, the appellant, Signature Real Estate (Pty) Ltd
(
Signature)
was not in possession of a fidelity fund certificate in its name at
the time the disputed commission between it and the
third respondent,
Atlantic Seaboard Realty (Pty) Ltd (Atlantic), was earned. Signature
claimed, however, that it was entitled to
be issued with the
certificate, as it
had
complied with the requirements of the Act, and that the reason the
certificate in its possession contained a misdescription
was due to
an error on the part of the Board. The Board concedes this.
[3]
The
court a quo, the Western Cape Division of the High Court, Cape Town,
held that Signature was not entitled to claim commission
in the
circumstances. It accordingly dismissed Signature’s application
against Atlantic for payment of commission, but subsequently
granted
leave to Signature to appeal to this court. Atlantic and the rest of
the respondents do not take part in the appeal. The
court a quo’s
decision is in conflict with that of the Gauteng Division of the High
Court, Johannesburg, in
Crous
International (Pty) Ltd v Printing Industries Federation of South
Africa
[2016]
ZAGPJHC 391;
[2017] 1 All SA 146
(GJ), where Coppin J held a contrary
view.
Crous
was
only brought to the attention of the court a quo during the
application for leave to appeal. Given the conflict between the
two
decisions, and the importance of the issue for estate agents’
profession, Signature was granted leave to appeal to this
Court,
pursuant to
s 17(1)
(a)
(ii)
of the
Superior Courts Act 10 of 2013
.
[1]
[4]
The facts are
briefly these.
During
April 2018, Signature and Atlantic jointly brokered a lease agreement
in terms of which they were each to receive 50 per
cent of the
commission due in terms of that agreement. After the full amount of
the commission was paid to Atlantic, it refused
to pay Signature the
latter’s share of the commission. Signature launched an
application in the court a quo seeking, among
others, payment of the
commission.
[5]
Atlantic
opposed the application, and also launched a counter-application
seeking certain relief against Signature, which is not
germane to
this appeal. In its answering affidavit, which also served as its
founding affidavit in its counter-application, Atlantic
challenged
Signature’s locus standi, alleging that at the time the lease
agreement was brokered, Signature was not in possession
of a fidelity
fund certificate.
[6]
In
its replying affidavit, which also served as its answering affidavit
in Atlantic’s counter-application, Signature denied
Atlantic’s
allegations and explained that
on
9 January 2017 Hidicol CC, which had traded as Signature
Real
Estate CC,
had been
converted into a company (the appellant).
On
10 May 2017 the Board was informed of the conversion, which was duly
recorded in its records and Signature complied with all
the Board’s
requirements in relation to changes in entities that hold fidelity
fund certificates. An application was made
to the Board in the name
of Signature for fidelity fund certificates to be issued to it, its
directors and its agents. On 1 January
2018 the Board erroneously
issued certificates in the name of Hidicol CC instead of Signature,
and similarly, to its directors
and agents, but in their former
capacities as members and agents of Hidicol CC.
[7]
Signature
further explained that, after being made aware of these errors, on
8 May 2018, the Board issued new certificates
to Signature, its
directors and agents. The certificates were later withdrawn, and
replaced with ones backdated to 1 January 2018.
In support of the
above, Signature attached an affidavit deposed to by the Registration
Manager of the Board, in which the above
was confirmed. Importantly,
the manager confirmed that Signature, its directors and agents were
entitled to be issued with fidelity
fund certificates on 1 January
2018, but due to the Board’s oversight, the certificates were
issued in the name of Hidicol
CC, which error was rectified in May
2018. The certificates issued in May 2018 were later withdrawn and
replaced with ones backdated
to 1 January 2018.
[8]
In its replying
affidavit in its counter-application, Atlantic averred that given how
the online applications for renewal of fidelity
fund certificates
worked, and the fact that the certificates were issued in the names
of Hidicol CC and its former directors and
agents, the 2018
applications were probably erroneously submitted in the name of
Hidicol CC instead of Signature. Thus, said Atlantic,
the
certificates were invalid, having been issued to a non-existent
company, its directors and agents. Atlantic accordingly contended
that Signature was precluded by s 34A of the Act from payment of
commission.
[9]
The
matter came before D M Davis AJ, who delivered judgment on
12 December 2018. She dismissed Signature’s application.
First, she accepted Atlantic’s argument that because the
fidelity fund certificates were issued in the name of Hidicol CC,
the
application for their issue must have been erroneously made in that
name, and that the certificates were, to that extent, invalid.
For
this conclusion, the learned judge sought reliance on the decision of
this Court in
Brodsky
Trading 224 CC v Cronimet Chrome Mining SA (Pty) Ltd and Others
[2016]
ZASCA 175
;
2017 (4) SA 610
(SCA). Consequently, she held, absent a
valid certificate, an estate agent was precluded, in terms of s 34A,
from claiming commission.
[10]
Section
34A 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.’
Section
34A, must be read with s 26 of the Act, which prohibits the rendering
of services as estate agent by any person, company
or close
corporation, unless they have been issued with a valid fidelity fund
certificate at the relevant time.
[2]
[11]
Atlantic’s
version that the application for the 2018 fidelity fund certificates
had probably been made in the name of Hidicol
CC and not of
Signature, was considered by the court a quo
to
constitute a genuine dispute of fact. According to the learned judge,
it had to be resolved in favour of Atlantic, purportedly
on the
application of the
Plascon-Evans
[3]
principle. She therefore concluded that the certificates were
invalid, and within the scope of
Brodsky
.
With respect, that principle was misapplied. There was no dispute of
fact.
Atlantic’s
version as to how the certificate was issued
was not based on
any facts or first-hand knowledge, but was purely speculative.
[12]
Signature,
on the other hand, stated that it had complied with all the
formalities and was entitled in terms of the provisions of
the Act to
be issued with the proper certificate in its own name and that the
misdescription was due to an error on the part of
the Board. And once
this was acknowledged by the Board, Atlantic’s
averment
lost impetus. The court a quo failed to consider all these. On the
evidential material before it the court below came to
the wrong
conclusion on the facts.
[13]
In the light of
the above, the court a quo’s reliance on
Brodsky
must be examined. There, a
company which operated as an estate agent had been converted
into a close
corporation. There was no notification to the Board of the
conversion, and consequently no request for new certificates
to be
issued in the name of the new entity. As a result, the Board
continued to issue fidelity fund certificates in the name of
the
(non-existent) company and to the former director of the converted
company in his capacity as such. No certificates were issued
to the
close corporation and its member. It was held that the close
corporation was precluded by s 34A of the Act from claiming
commission. It was explained (at para 22):
‘
This is not simply
an issue of nomenclature, or a misdescription in the name of the
certificate holder, but one of substance. The
objectives of the Act
are not fulfilled by the issue of invalid certificates by the Board
as they play a central role in ensuring
that estate agents comply
with its provisions. There was accordingly no basis for the court a
quo to conclude that the appellant
had substantially complied with
its requirements’.
[14]
The court a quo
seemingly considered the facts of the present case analogous to those
in
Brodsky
.
They are not. The two cases are clearly distinguishable in the
following respects. First, in
Brodsky
,
the Board was not informed of the conversion, whereas in this case,
the Board was timeously informed. Second, in
Brodsky
,
the converted close corporation never applied to the Board for
fidelity fund certificates to be issued for it and its member.
In
this case, the converted company did make such application timeously,
and complied with all the requirements for such certificates
to be
issued. Third, in
Brodsky
it was the fault of the converted close corporation that the
certificates were issued in the name of a non-existent company,
whereas
in this case, the fault lies squarely and solely with the
Board. So viewed, the issue in this case, unlike in
Brodsky
,
was simply one of nomenclature, or a misdescription in the name of
the certificate holder, rather than of substance.
Brodsky
is therefore of no
assistance to Atlantic. It follows that the court a quo’s
reliance on
Brodsky
was
misconceived
.
[15]
I
referred earlier to
Crous
,
where an estate agent company had not been issued with fidelity fund
certificates for 2008 and 2009. However, its directors had
been
issued with certificates for those years. The company had complied
with the legal requirements and the failure to issue the
certificate
was due to a technical glitch at the Board, resulting in the
certificate of the company not being printed, a fact confirmed
by a
representative of the Board. At para 98, Coppin J concluded that the
purpose of ss 26 and 34A had been achieved, holding that
‘in
substance (though not form) the plaintiff was authorised by the Board
to perform acts as estate agent for payment’
and that the
company was entitled to payment of commission.
[16]
In
the present case, the court a quo deemed it irrelevant that Signature
and its estate agents might well have been entitled to
be issued with
fidelity fund certificates as at 1 January 2018. The court a quo
said:
‘
The
wording of s 34A is clear. The section does not require mere
entitlement to be issued with a valid [fidelity fund certificate]
in
order to be able to claim commission; it requires a valid [fidelity
fund certificate] actually issued at the time when the commission
is
earned. To adopt the interpretation of s 34A contended for by Mr
Kantor would do violence to the clear wording of the section:
it
would cross the divide from statutory interpretation to impermissible
judicial legislation (see
Natal
Joint Municipal Pension Fund v Endumeni Municipality
2012 (4) SA 593
(SCA) para 18).’
And
in the judgment granting leave to appeal:
‘
I am of the
respectful opinion that the court’s reasoning in
Crous
fails to take into account that the purpose of ss 26 and 34A is not
only to ensure that estate agents have met the requirements
of the
Act to practise as such, but also that estate agents can demonstrate
proof to any interested party of compliance with the
requirements of
the Act. In other words, part of the function of a [fidelity fund
certificate] is to serve as public proof of an
estate agent’s
status. This element of publication was ignored in
Crous
’.
[17]
The
provisions of 34A are clearly peremptory. But even peremptory
provisions must yield to two interpretive imperatives. First,
the
injunction of s 39(2) of the Constitution, which enjoins courts, when
interpreting any legislation, to promote the spirit,
purport and
objects of the Bill of Rights. In this instance, the right implicated
is one enshrined in s 22 of the Constitution,
namely the right to
freely engage in a trade, occupation or profession
.
Therefore, an application of the section that promotes, rather than
impedes, the exercise of that right, is to be preferred Second,
due
regard must be had to the purpose of the statute, more specifically,
whether adopting a strict or literal interpretation of
its provisions
is consistent with what the Act seeks to achieve.
[18]
In
the present case one must bear in mind the general object of the Act,
as set out in its long title, which is to control certain
activities
of estate agents in the public interest through the establishment of
the Board and the Estate Agents Fidelity Fund (the
fidelity fund).
The fidelity fund is established in terms of s
12(1)
of the Act. Its purpose is to reimburse persons who, in certain
circumstances, have suffered financial loss due to missappropriation
of trust monies by estate agents. The monies in this fund are,
in the main, contributed by all registered estate agents who,
in
return, are issued with valid fund certificates. In other words, a
fidelity fund certificate is issued in exchange for compliance
by an
estate agent with the relevant requirements set out in the Act,
which
include payment of a stipulated amount into the fund. In this way,
members of the public are assured of reimbursement in the
event of
misappropriation of their monies by an estate agent.
[19]
The
Act provides a regulatory framework for estate agents. One of the key
components of that framework is an estate agent’s
trust
account. In terms of
s
32 of the Act,
every
estate agent is required to open and keep one or more separate trust
accounts with a bank into which money held or received
by or on
behalf of such estate agent shall be deposited. The estate agent is
required to notify the board of the details of such
a bank account or
accounts.
[20]
In
Rogut
v Rogut
1982 (3) SA 928
(A) at 939C the object of the Act was summed up as
follows:
‘
The
general object of the Act was to protect the public against some
persons by requiring all estate agents, as defined, to take
out a
fidelity fund guarantee (which is not granted automatically); and to
pay the levies and contributions; and by requiring all
estate agents
to keep necessary accounting records and to cause them to be audited
by an auditor, and by obliging every estate
agent to open and keep a
separate trust account with a bank and forthwith to deposit therein
the moneys held or received by him
on account of any person’.
[21]
In
terms of the Board’s rules, an application for a fidelity fund
certificate for the following year must be made not later
than 31
October of each year. Signature had complied with this and all other
requirements of the Act. But for the error on the
part of the Board,
Signature was entitled to, and would have been issued with, a valid
fidelity fund certificate for the period
1 January-31 December 2018
.
[22]
The
court a quo suggested that where the Board delays in issuing a
fidelity fund certificate to a compliant estate agent, such an
estate
agent should apply to court in terms of
s 6(3)
of the
Promotion of
Administrative Justice Act 3 of 2000
for a mandamus compelling the
Board to issue the certificate. That attitude was clearly incorrect.
On the other hand, estate agents
should not adopt a supine attitude
in the face of the Board’s errors. They should do what is
reasonably within their power
to have the situation rectified. In the
meantime their compliance with the requirements should be a primary
factor in the determination
of disputes that arise before the error
is rectified.
[23]
In the present
case the purpose of the Act was served. The public would have been
protected. If, for example, a member of the public
had suffered loss
due to misappropriation by an estate agent involved in the agreement
in question, the Board, in my view, would
have been hard-pressed to
argue that a claim against the fidelity fund should not succeed
because a certificate had not physically
been issued to the wrongdoer
at the time of the conclusion of the agreement. Such an outcome would
be contrary to the purpose of
the legislation.
[24]
I agree that care
should be taken to observe the peremptory provisions of s 34A of the
Act. The facts in the present case and in
Crous
are within a narrow compass. In both instances, very specific to
their facts, the provisions of the Act in relation to a fidelity
fund
certificate being issued were met and in both the estate agents were
rightly considered to have been in possession of a certificate,
thus
meeting the requirements of the section. The findings in both cases
should not be construed as an invitation to laxity or
to a liberal
approach to the application of s 34A.
[25]
It
follows that the court a quo should have found in Signature’s
favour. The appeal must thus succeed. Atlantic is liable
for the
costs in the court a quo. There is no costs order in this court as
none of the respondents participated in the appeal.
[26]
The
following order is made:
The
appeal is upheld. The order of the court a quo is set aside and
replaced with the following:
‘
1.
The third respondent (Atlantic Seaboard Realty (Pty) Ltd) is ordered
to pay the applicant:
1.1
the
amount of R13 440;
1.2
interest
on the above amount at the prescribed rate from 13 June 2018 to date
of payment; and
1.3
the
applicant’s costs, including the costs reserved on 17 July
2018.’
_______________________
T M Makgoka
Judge
of Appeal
APPEARANCES:
For
appellant: A Kantor SC
Instructed
by: Frank Biccari, Cape Town
Van
der Merwe & Sorour, Bloemfontein
[1]
Section
17(1)
(a)
(ii)
provides:
‘
Leave to appeal
may only be given where the judge or judges concerned are of the
opinion that –
(a)
(i) . . .
(ii) there is some other
compelling reason why the appeal should be heard, including
conflicting judgments on the matter under
consideration’.
[2]
Section
34A was introduced in response to
Noragent
(Edms) Bpk v De Wet
[1985]
3 All SA 153
(T);
1985 (1) SA 267
(T), where the Transvaal full
court held, with reference to
Swart
v Smuts
[1971]
2 All SA 153
(A);
1971 (1) SA 819
(A), that an agreement between an
estate agent and an owner of land was not invalid merely by reason
of the fact that the estate
agent had failed to comply with the
provisions of s 26 of the Act and that the estate agent was entitled
to enforce a contractual
claim for commission. Thus, viewed in this
context, s 34A simply made explicit, what is implicit in s 26.
[3]
In accordance
with the well-known principle enunciated in
Plascon-Evans
Paints Ltd v Van Riebeeck Paints (Pty) Ltd
[1984] ZASCA 51
;
[1984] 2 All SA 366
(A);
1984 (3) SA 623
(A) at 634E-635C, which is
this: in
motion
proceedings where disputes of fact arise on the affidavits, a final
order can be granted only if the facts averred in the
applicant's
affidavit, which have been admitted by the respondent together with
the facts alleged by the respondent, justify
such an order. This is
so, unless the respondent’s version
consists
of bald or uncreditworthy denials, raises fictitious disputes of
fact, is palpably implausible, far-fetched or so clearly
untenable
that the court is justified in rejecting them merely on the papers.