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[2019] ZASCA 112
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Atlantic Beach Homeowners Association NPC and Others v Estate Agency Affairs Board (978/2018) [2019] ZASCA 112; 2019 (6) SA 381 (SCA) (16 September 2019)
THE
SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Reportable
Case
No: 978/2018
In
the matter between:
ATLANTIC
BEACH HOMEOWNERS ASSOCIATION NPC FIRST
APPELLANT
HARRY
WHITE SECOND
APPELLANT
ELMARIE
CAMPBELL REAL ESTATE (PTY) LTD THIRD
APPELLANT
ELMARIE
CAMPBELL FOURTH
APPELLANT
and
THE ESTATE AGENCY AFFAIRS
BOARD RESPONDENT
Neutral
citation:
Atlantic Beach Homeowners
Association NPC v The Estate Agency Affairs Board
(978/2018)
ZASCA 112 (16 September 2019)
Coram:
Navsa, Wallis, Mbha and Dambuza and Van
Der Merwe JJA
Heard:
15 August 2019
Delivered:
16 September 2019
Summary:
Estate Agents – whether the first and second appellants
operated as estate agents in terms of the Estate Agency Affairs Act
112 of 1976 – court held that by concluding and implementing a
property partner agreement the first and second appellants
did not
hold themselves out or advertise themselves as estate agents –
appeal upheld with costs.
ORDER
On
appeal from:
Western Cape Division of
the High Court, Cape Town (Steyn J sitting as court of first
instance):
1 The appeal is
upheld with costs.
2 The order of
the court a quo is set aside and replaced with the following:
‘
a)
The respondent’s decision to charge the appellants as
communicated to the appellants on 11 April 2016 is hereby reviewed
and set aside.
b) The
respondent is interdicted from proceeding with the prosecution of the
said charges against the appellants.
c)
The respondent is ordered to pay the applicants’
costs.’
JUDGMENT
Mbha
JA (Navsa, Wallis, Dambuza and Van Der Merwe concurring):
[1]
This appeal is against the judgment and order of the Western Cape
Division of the High Court, Cape Town (per Steyn J), in terms
of
which the Court dismissed the appellants’ application for an
order: declaring that the first and second appellants were
not estate
agents as defined in s 1 of the Estate Agency Affairs Act 112 of 1976
(the Act); reviewing and setting aside the decision
of the respondent
to charge the appellants with contraventions of the Act; and
interdicting the respondent from proceeding with
the prosecution of
the disciplinary proceedings against the appellants. The basis of the
judgment was that it was inappropriate
for the Court to intervene in
unterminated disciplinary proceedings. This appeal is with leave of
the Court a quo.
[2]
The first appellant, Atlantic Beach Homeowners Association NPC
(ABHOA) is the home owner’s association for the Atlantic
Beach
Estate (the estate), situated in Melkbosstrand on the West Coast
outside Cape Town. Its membership consists of owners of
immovable
property within the estate and its object is the control over and
maintenance of buildings, services and amenities within
the estate.
The second appellant, Harry White (Mr White) is ABHOA’s chief
executive officer. The third appellant, Elmarie
Campbell Real Estate
(Pty) Ltd (Pam Golding), a franchisee of the Pam Golding Group, is an
estate agent as defined in the Act.
The fourth appellant, Elmarie
Campbell (Ms Campbell) is the managing director of Pam Golding. The
respondent is the Estate Agency
Board (the Board) established under s
2 of the Act.
[3]
During August 2015, the respondent charged the appellants with
certain alleged contraventions of the Act. The charges emanated
from
an agreement that had been concluded between ABHOA represented by Mr
White and Pam Golding, duly represented by Ms Campbell,
on 9 July
2015. The agreement, styled Property Partner Agreement (PPA), was for
a three year period and provided for the appointment
of Pam Golding
as ABHOA’s property partner, on a non-exclusive basis,
[1]
for the
marketing of properties forming part of the estate.
[4]
In terms of the agreement, ABHOA agreed to grant Pam Golding certain
marketing benefits which were described in clause 4 of
the agreement.
These included that ABHOA would, at its cost and expense: display Pam
Golding’s name and branding on ABHOA’s
marketing pamphlet
and map of the estate; on a weekly basis cause one property to be
advertised in a local newspaper and in ABHOA’s
newsletter;
display a ‘for sale’ sign branded with Pam Golding’s
name and corporate logo on the relevant property;
provide access to
ABHOA’s electronic media advertising template; entitle Pam
Golding to indicate on its corporate stationery
that it was
associated with ABHOA; provide residents of the estate with a fridge
magnet which included Pam Golding’s contact
details, provide a
link from ABHOA’s website to that of Pam Golding in respect of
properties for sale; and display Pam Golding’s
contact details
and logo at all entrances to the Estate.
[5]
As a consideration for these marketing benefits, Pam Golding would
pay ABHOA a marketing fee equal to 1%, excluding value-added
tax, of
the gross purchase price of each property sold by Pam Golding up to a
purchase price of R5 million, and 0.5% of anything
above that price.
In addition to payment of the marketing fee, Pam Golding would be
obliged at all times to use its best endeavours
to promote and extend
sales of properties in the estate and enhance its reputation by
making all efforts to promote it. Pam Golding
also warranted that its
sole business was to operate as an estate agency and that all the
necessary licences, certificates and
permits necessary to operate the
business of an estate agency were in place.
[6]
What precipitated the charges against the appellants was a complaint
lodged with the Board by attorneys representing certain
estate
agents, against Pam Golding and Ms Campbell. In essence, the
complaint was that ABHOA granted to Pam Golding the exclusive
right
to market properties within the estate, in consideration for
commission of 1% of the purchase price of any property sold
in the
estate through Pam Golding. Significantly, no complaint was laid
against ABHOA and Mr White.
[7]
ABHOA and Mr White were charged on three counts. Count 1 was an
alleged contravention of s 26 of the Act, which requires any
person
who performs any act as an estate agent to be a holder of a valid
fidelity fund certificate. It was alleged that during
July 2015 ABHOA
and Mr White, without holding a valid fidelity fund certificate
issued by the Board, operated or held themselves
out to be estate
agents and signed the PPA in terms of which they agreed to act as
‘spotters’. Listed under
this general charge
were various alleged transgressions which were in effect obligations
undertaken by ABHOA in terms of clause
4.2 of the PPA.
[8]
Count 2 was an alleged contravention of s 34A of the Act read with
regulation 2.4 of the code of conduct published on 24 December
1992,
[2]
in that
during the relevant period ABHOA and Mr White received or contracted
for remuneration or other payment as an estate agent,
without holding
a valid fidelity fund certificate. This charge arose from the
stipulation for remuneration in clause 5 of the PPA.
[9]
Count 3 was an alleged contravention of regulation 2.4 of the code of
conduct and regulation 2
(c)
of the Specifications of Service 1981. The allegation was that during
the relevant period, ABHOA and Mr White had charged for and
received
a consideration of 1% of the gross purchase price of each property
sold by Pam Golding and Ms Campbell in respect of canvassing
the
sellers or purchasers of immovable property situated within the
estate, in exchange for the marketing benefits and other estate
agent
facilities afforded to Pam Golding.
[10]
The single charge against Pam Golding and Ms Campbell was based on
clause 5 of the PPA. It was alleged that in breach of regulation
2.1
of the code of conduct,
[3]
read with
regulation 2
(c)
of the Specifications of Services 1981, Pam Golding and Ms Campbell
undertook to pay ABHOA the marketing fee of 1% of the gross
purchase
price of each property sold by Pam Golding or Campbell of sales value
up to R5 million and 0,5% (percentage) of the sale
value and above R5
million, for the duration of the PPA, at a time when the latter had
not been issued with a valid fidelity certificate.
[11]
Upon receipt of the charges, the appellants approached the court a
quo seeking a declarator that ABHOA and Mr White were not
estate
agents as defined in the Act. They also sought an order reviewing and
setting aside the Board’s decision to charge
them, averring
that the charges against Pam Golding and Ms Campbell were based on
what the appellants contended to be the Board’s
misapprehension
that ABHOA and Mr White had been conducting themselves as estate
agents. The appellants further sought an order
interdicting and
restraining the Board from proceeding with the prosecution of the
charges against them.
[12]
On 20 April 2018, the court a quo decided the application on the
basis that the question whether ABHOA and White had operated
as
estate agents, was one which properly fell to be determined by the
Board’s committee of enquiry and that it would be inappropriate
for the court to decide this issue and to grant the consequential
review and interdictory relief. In arriving at this conclusion,
the
court a quo held that no exceptional circumstances had been shown to
justify the intervention of the court at that stage of
incomplete
disciplinary proceedings.
[13]
Before us, the appellants’ initial stance was to attack the
court a quo’s approach that it was inappropriate to
intervene
in undetermined disciplinary proceedings. They did however argue that
the issue of jurisdiction of the Board was a threshold
question that
had to be determined in advance of the disciplinary proceedings in
question. The Act did not empower the Board to
decide whether or not
someone fell within the definition of an estate agent and therefore,
so the argument continued, this was
a matter of statutory
interpretation that only a court could decide. In the light of the
conclusion that I have reached, it is
not necessary to express a view
on the latter argument.
[14]
Ultimately, Counsel for both parties agreed that the matter
fell to be resolved by determining whether or not ABHOA or
Mr White,
on the evidence relied upon by the Board, performed any act as an
‘estate agent’ as defined. Only para
(a)
of the
definition of ‘estate agent’, as set out in the Act is
presently relevant. It provides that estate agent:
‘
means
any person who for the acquisition of gain on his own account or in
partnership, in any manner holds himself out as a person
who, or
directly or indirectly advertises that he, on the instructions of or
on behalf of any other person –
(i)
sells or purchases or publicly exhibits for sale immovable property
or any business undertaking or negotiates in connection
therewith or
canvasses or undertakes or offers to canvass a seller or purchaser
therefor; or
(ii)
lets or hires immovable property . . .; or
(iii)
collects or receives any moneys payable on account of a lease of
immovable property . . . ; or
(iv)
renders any such other service as the Minister on the recommendation
of the board may specify from time to time in the
Gazette.’
[15]
In
Rogut
v Rogut
[4]
Holmes AJA
stated that the words ‘for the acquisition of gain’
modify the holding out or the advertising, rather than
the selling,
buying or letting of property. He said that this connotes that an
estate agent, as defined, is a person who is, inter
alia, looking for
business. Thus, a person who merely does one or more of the acts
listed in subparagraph (i) to (iv) of the definition,
does not
thereby bring himself or herself within the definition, unless he has
also held himself out or so advertised, for the
acquisition of gain,
that he is a person who does these things. Holmes AJA also observed
that if the legislature had intended that
the performance
simpliciter
of
any act listed in paras (a)(i)(ii), (iii) and (iv) of the definition
of ‘estate agent’ should render the person performing
it
subject to the Act, he would have expected it to say so. It follows
that the key words in the definition of estate agent are
‘holds
out’ or ‘advertise’. Clearly, they must precede the
instructions or mandate and without such ‘holding
out’ or
‘advertising’, there cannot be an ‘estate agent’
as defined.
[16]
In the result, the issue to be decided in this case crystallised to
whether ABHOA or Mr White has in any manner, directly or
indirectly,
held themselves out as persons who sell properties of others for
commission or advertised themselves as persons who
do so. In this
regard, the Board highlighted the obligations of ABHOA which are set
out in various clauses of the PPA, and submitted
that the terms of
the PPA and its implementation demonstrated that for the acquisition
of gain, ABHOA had held itself out to be
a property partner of Pam
Golding for the sale of immovable properties in the estate, which
constituted conduct of an estate agent
as defined in the Act.
[17]
It is common cause that ABHOA had implemented the PPA, in the
following manner:
(i) In the property section of the
Sunday Times Neighbourhood Marketplace publication of 31 January
2017, the ‘Agency Guide’
referred to ‘Atlantic
Beach Estate’, as appearing on page 19 thereof. On this page,
however, properties were advertised
for sale by Pam Golding and ABHOA
was only indicated as its ‘sole property partner’.
(ii) ABHOA allowed Pam Golding to
advertise estate properties for sale in the weekly newsletter
distributed by ABHOA to residents;
(iii) The relevant ‘For Sale’
signs, ‘Sold’ signs and displays at the entrance to the
estate displayed the
names and logos of the estate and Pam Golding.
On all of these it was in some or other manner indicated that Pam
Golding was a
‘property partner’ in relation to the
estate. This also applied to the fridge magnets.
(iv) Under the
words ‘Property for Sale’ ABHOA’s website provided
a link to the website of its property partner,
Pam Golding.
[18]
A careful perusal of the property partner agreement and the evidence
of implementation thereof does not reveal that ABHOA or
Mr White in
any manner held themselves out or advertised that they sought
mandates to sell property. There is no evidence that
ABHOA or Mr
White solicited approaches from the general public to purchase or
sell properties on their behalf for commission. The
property
partnership agreement involved nothing more than the provision by
ABHOA to Pam Golding of marketing benefits, which are
specified in
the agreement in return for the consideration specified in the PPA.
[19]
For these reasons, I am satisfied that there is nothing placed before
this court that suggests that, by concluding and implementing
the
property partner agreement, ABHOA or Mr White held themselves out or
advertised themselves as persons that seek to sell the
properties of
others for commission. Thus there is no evidence that they acted as
estate agents as defined. In the result they
should not be subjected
to the envisaged disciplinary proceedings. As the charge against Pam
Golding and Ms Campbell is entirely
dependent on ABHOA or Mr White
having acted as estate agents, the same applies to them. I find,
accordingly, that the appellants
have made out a case for the grant
of the orders in paragraphs 2 and 3 of the Notice of Motion. In the
circumstances the following
order is made:
1 The appeal is
upheld with costs.
2 The order of
the court a quo is set aside and replaced with the following:
‘
a)
The respondent’s decision to charge the appellants as
communicated to the appellants on 11 April 2016 is hereby reviewed
and set aside.
b) The
respondent is interdicted from proceeding with the prosecution of the
said charges against the appellants.
c) The
respondent is ordered to pay the applicants’ costs.’
_______________
B H Mbha
Judge of Appeal
APPEARANCES:
For
Appellant: E Fagan SC
Instructed
by: Hayes Inc, Cape Town
Webbers
Attorneys, Bloemfontein
For
Respondent: S P Rosenberg
Instructed
by: Edward Nathan Sonnenbergs, Cape Town
Symington
& De Kok Attorneys, Bloemfontein
[1]
Clause 3.2 of the agreement expressly recorded that it was not
intended that the relationship created in terms of thereof was to
be
that of a partnership or joint venture and that the agreement was not
to be so construed.
[2]
GN R3415 in GG 14489: In terms of the s8
(b)
of the Act, the Board has the power to frame and publish, with the
approval of the Minister of Trade, a code of conduct which
shall be
compiled with by estate agents and to take such steps as may be
necessary or expedient to ensure such compliance.
[3]
Regulation 2.1 of the code of conduct provides that an estate agent
shall not in or pursuant to the conduct of his business do
or omit
to do any act which is or may be contrary to the integrity of estate
agents in general.
[4]
Rogut v
Rogut
1982
(3) SA 928
(AD) at 937H-938A-C.