EFFECTIVE CAUSE – SUCCESSFUL COMMISSION CLAIM ON PROBABILITIES
Following up on previous articles relating to ‘effective cause’ and the estate agent’s lawful right to claim commission, it needs to be pointed out that an estate agent’s mandate does not have to be in writing, but can also be a verbal mandate.
A perfect example can be extracted from a recent court decision in the case of Roux and Another v Magnolia Ridge Properties 197 (PTY) Ltd (EL556/2012, ECD1256/2012)  ZAECELLC 1 (3 February 2015):
In the case under example, the Seller tried to side-step the estate agent, because the final sale agreement was signed without the agent’s assistance, 10 months after three initial agreements lapsed due to the non-fulfilment of suspensive conditions.
Kevin Roux Properties, the estate agency, was given an oral mandate by Magnolia Ridge Properties 197 (PTY) Ltd to source a willing and able purchaser at an asking price of R55 million, or at a price agreeable to Magnolia Ridge Properties (MRP). According to Roux Properties, the implied terms of the mandate were that MRP would pay hem commission equal to the generally accepted rate of commission for selling a property of the nature of the property under consideration in the area, together with VAT. The general accepted rate in the area for commission was set at 5% + VAT.
Roux Properties introduced Zambli 216 (PTY) Ltd to the property, and as a result thereof, a written option for the purchase of the property was concluded. Subsequently Zambli concluded a further option, which was followed by a deed of sale. In all agreements between MRP and Zambli, it was reflected that Roux Properties was entitled to commission payment in the amount of R1 million + VAT. All email correspondence between the parties indicated the involvement of Roux Properties in the negotiations of the sale.
Although none of the initial agreements materialised, due to the non-fulfilment of suspensive conditions, a final sale agreement was concluded 10 months later for the sum of R52million and transfer was registered. In the final sale agreement, NO mention was made to Roux Properties and it was confirmed that NO agent was the effective cause of the sale. Roux Properties instituted a claim of commission, which claim was rejected by MRP.
The two main issues in the present case were whether or not Roux Properties received a mandate from MRP to find a buyer, and if so, whether or not Roux Properties was the effective cause of the sale.
The Court held:
- All evidence clearly indicates Roux Properties’ involvement with the introduction between the parties, and that NO other estate agent was involved.
- The parties, Seller and Purchaser, remained same throughout, the purchase price was more or less similar, and so were the terms of the final agreement.
- It appeared therefore that on the probabilities, there was no other effective cause of the earlier agreements other than Roux Properties and, in the absence of any other intervening estate agent, the Court concluded the Roux Properties was the effective cause of the final agreement as well.
- The Court accordingly found in favour of Roux Properties.
Wietz Viljoen, WVA INC.
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