UCHENA JA: The appellant El Elion Investments (Pvt) Ltd
was the plaintiff in the Magistrates' Court and respondent in the appeal to the
High Court by Auction City (Pvt) Ltd the respondent in this appeal.
The
appellant submitted a tender for the purchase of shoe manufacturing equipment
which was being sold by the respondent on behalf of Mrs Grimmel in her capacity
as the Liquidator of Conte Shoes (Pvt) Ltd.
The respondent who is an auctioneer floated a tender for the sale of the
shoe manufacturing equipment. The appellant's
tender for the equipment was in the sum of $100 000-00. The respondent accepted it. The appellant paid a deposit of US$10 000-00 in terms
of the conditions of sale. The
conditions of sale obliged the appellant to pay a deposit of 10% and the
balance in 7 days. The appellant failed
to pay the balance within the stipulated period. It was granted several extensions but still
failed to pay the balance of the purchase price. The respondent's principal cancelled the sale.
The appellant demanded a refund of the
deposit from the respondent. The
respondent refused to refund the deposit stating that it was entitled to its
commission and to recover its principal's expenses.
The appellant issued
summons in the Magistrates Court claiming the refund of the $10 000-00 deposit.
The Magistrates Court ordered the appellant
to refund $8 277-00 to the respondent. It
reasoned that an auctioneer is only entitled to a commission when a sale is
successfully performed. The respondent
appealed to the High Court which upheld the appeal and set aside the Magistrate's
decision. The appellant appealed to this Court against the High Court's
decision. The following are the
appellant's grounds of appeal;
“1. The court a quo erred in law in finding that the respondent was entitled to a
commission merely upon its acceptance of the offer made by the appellant
pursuant to the auction and not upon a successful performance of the contract
of sale by the appellant.
2.
The court a quo erred in law in finding that clause 9 of the Notes and Conditions
of Sale was valid and enforceable in the circumstances of this case.
3.
The court a quo grossly misdirected itself on the facts, such misdirection
constituting an error of law, in finding that security costs were due and
payable in the circumstances of this case.
4.
In any event the court a quo erred at law in entertaining the
appeal when on the facts the respondent had fully satisfied the judgment of the
Magistrates Court.”
In
its Heads of Argument the appellant abandoned grounds of appeal 3 and 4.
AUCTIONEER'S
COMMISSION
Professor
Madhuku for the appellant submitted,
that the court a quo erred when it
set aside the Magistrate's decision. He
however admitted that a contract was concluded when the respondent accepted the
appellant's tender. The issue is whether
after a contract has come into existence an auctioneer is entitled to his
commission. Relying on the case of Crusader Real Estate Consultancy (Pvt) Ltd v
Cabs 1999 (2) ZLR 257 (S), Professor Madhuku submitted that an auctioneer is
only entitled to commission after the performance of the contract and not on
its conclusion.
Miss
Mahere for the respondent submitted
that an auctioneer is entitled to his commission on the conclusion of the sale.
She further submitted that the tender
made by the appellant is the offer which was accepted by the auctioneer (the
respondent) concluding the contract of sale. In conclusion, she submitted that
the sale and not its performance entitles the respondent to his commission. I agree.
The case of Crusader (supra) relied on by Professor Madhuku
does not support his submission that an auctioneer is only entitled to
commission on the successful performance of the contract. The court's decision in that case was based
on the sale secured by the auctioneer having been subject to confirmation by
the Sheriff on whose behalf it was being conducted. The Sheriff did not confirm the sale. It is for that reason that the Court refused
to grant the auctioneer's commission for the conditional sale. It was not because there had been no
performance of the contract he had conditionally secured for his principal. EBRAHIM
JA clearly makes this point at pp 259H to 260A-C where he said:-
“In the instant
case, the property was not sold on public auction and an approach was made to
the seller (the Sheriff) by the buyer (the respondent/ judgment creditor) for
the eventual purchase of the property. Both the seller and the purchaser in this
matter were already acquainted with one another due to the court action taken
by the respondent in seeking to execute on the immovable property. These facts
clearly emerge from the statement of agreed facts placed before the learned
judge a quo.
In
the case of Martin v Currie (supra) at p 53 BRISTOW J stated:
'I think it clear
that the employment of an auctioneer does not give him any authority except to
sell by auction. The case of Muller v
Kemp (1 Searle 167) was cited to us, which, on the facts, is not in point,
but the court there cited, with approval, a passage from Storey on Agency which
states that the agency of an auctioneer ends as soon as the auction is held. An
auctioneer is employed to sell property by auction on the conditions arranged;
if he sells the property he gets his commission: if he does not sell the property
he gets no commission.'
On the facts of the present case, it
cannot be said that the appellant sold the property. It was the Sheriff who did
so. In the circumstances the appellant clearly was not entitled to receive the
commission he claims.” (emphasis added)
The
difference between this case and the Crusader
case (supra) is that the crusader
auction sale was subject to confirmation by the sheriff while in this case the
sale through tender was not subject to any confirmation by the auctioneer's
principal. It became perfecta on
acceptance by the auctioneer on behalf of its principal.
In
this case the parties entered into a contract which the appellant partly
performed by paying the deposit. When he
failed to pay the balance of the purchase price and sought indulgencies he was
already in the middle of a contract. The
auctioneer had already performed his mandate and was entitled to his commission
from the moment the contract was concluded. The auctioneer's commission has nothing to do
with the performance of a contract. It
is earned the moment a sale through him/it comes into existence. The court a
quo was therefore correct when it held that the respondent was entitled to
his commission which was 10% of the agreed price of $100 000 00.
Clause
9 of the Notes and Conditions of Sale
Clause 9 of the Notes and
Conditions of Sale reads as follows;
“The balance of
the total amount of the invoice must be paid to Auction City within 7 days of
notification of the outcome of the tender. Should this condition not be met in
its entirety, the sale may be cancelled solely at the discretion of the
liquidator. In such case, any deposit will be refunded less agent's commission
(including VAT) and any expenses incurred by the Liquidator or her agents in
the process of conducting the sale and its aftermath. The timing of such refund
will be at the discretion of the Principal or her agents.”
Professor
Madhuku for the appellant submitted
that this clause offends against the provisions of the Contractual Penalties
Act [Chapter 8:04] and is therefore
illegal and not enforceable.
Miss
Mahere for the respondent submitted
that the appellant did not plead this issue in the Magistrates Court and it was
not canvassed in the appellant's evidence. Professor Madhuku submitted that it was pleaded in the Magistrates Court by
referring to particular of claim No 8 on record p 24. In particular 8 the appellant said;
“8. In
the circumstances Plaintiff is entitled to a full refund of its deposit as
first and Second Defendant have no legal basis for withholding Plaintiff's
deposit in the sum of $10 000-00. “
The
above is not a plea that the respondent is in terms of the Contractual
Penalties Act not entitled to keep the deposit, but a mere allegation that the
respondent does not have a legal basis to withhold the deposit. It refers to respondent's legal basis to keep
the deposit as opposed to the appellant's legal basis for claiming a refund.
Professor
Madhuku thereafter relied on the
appellant's closing address as proof that the issue of contractual penalties
was pleaded in the Magistrates Court.
Miss Mahere in response while admitting that the appellant dealt with
the contractual penalties issue in its closing submissions submitted that a
closing submission is not part of the parties' pleadings. I agree. A closing submission made at the end of a
trial on an issue not pleaded or canvassed in evidence does not constitute a
pleading or evidence on that issue. Where
the issue has to be pleaded the comment on it in closing submissions does not
cure the need for it to be pleaded. Closing submissions are not pleadings. WESSELS J in Benson & Simpson v Robinson 1917 WLD 126 commented on pleadings
as follows:
“The Plaintiff
shall state in concise terms what facts he intends to rely on and to prove and
the Defendant shall do the same so that on the day of trial neither party shall
be taken by surprise and that it may not be necessary to have the case
adjourned, thereby causing wasted expense to both litigants—“
The same point was made
in Trope v South African Reserve Bank 1992 (3) SA 208 (T) at page 210G-H where
Mc CREATH J said;
“It is of course a
basic principle that particulars of a claim should be so phrased that a
defendant may reasonably and fairly be required to plead thereto. This must be
seen against the background of the further requirement that the object of
pleadings is to enable each side to come to trial prepared to meet the case of
the other and not to be taken by surprise. Pleadings must therefore be lucid
and logical and in an intelligible form; the cause of action or defence must
appear clearly from the factual allegations made. (Harms Civil Procedure in the
Supreme Court) at 263-4.”
A party is therefore
required through pleadings to place on record its case or defence before the
trial starts. This is especially so when
a party intends to rely on issues which have to be proved.
It is accepted that a
point of law can be raised at any stage of the process even on appeal. The law on the raising of points law for the
first time on appeal is clear and has been articulated in a plethora of cases. In Muchakata
v Netherburn Mine 1996 (1) 153 (S) at p 157A KORSAH JA said;
“Provided it is
not one which is required by a definitive law to be specially pleaded a point
of law, which goes to the root of the matter, may be raised at any time, even
for the first time on appeal, if its consideration involves no unfairness to
the party against whom it is directed: Morobane v Bateman 1918 460; Paddock Motors (PTY) Ltd v Igesund 1976 (3) SA 16 (A) at
23D-G.”
In Muskwe v Nyajina & Ors SC 17/12 ZIYAMBI JA at p 2 of the
cyclostyled judgment said;
“Undoubtedly a
point of law can be raised at any time even though not pleaded. However, this
is subject to certain considerations, one of which is that the court has to
consider whether raising a point of law at this juncture would cause prejudice
to the party against whom it is raised.”
Points of law come in
different forms. Some come as settled law to which proven facts are applied to
determine the result. Some call for the
leading of evidence to establish their applicability. This usually, applies to
statutory provisions whose applicability depends on stated conditions. In this case the appellant relies on the
provisions of s 4 of the Contractual Penalties Act [Chapter 8:04] which provides as follows;
“(1) Subject to this Act, a penalty stipulation
shall be enforceable in any competent court.
(2) If
it appears to a court that the penalty is out of proportion to any prejudice
suffered by the creditor as a result of the act, omission or withdrawal giving
rise to liability under a penalty stipulation, the court may—
(a) reduce the penalty to such extent as the
court considers equitable under the circumstances; and
(b) grant such other relief as the court
considers will be fair and just to the parties.
(3) Without derogation from its powers in
terms of subsection (2), a court may—
(a) order the creditor to refund to the debtor
the whole or any part of any instalment, deposit or other moneys that the
debtor has paid; or
(b) order the creditor to reimburse the debtor
for the whole or part of any expenditure incurred by the debtor in connection
with the contract concerned.
(4) In determining the extent of any prejudice
for the purposes of subsection (2), a court shall take into consideration not
only the creditor's proprietary interest but every other rightful interest
which may be affected by the act, omission or withdrawal in question.”
Section 4 (2) to (4) clearly indicate that the Magistrates
Court and this Court can only apply the provisions if adequate information has
been placed before them. In terms of s 4
(2) if it appears to a court that the penalty is out of proportion to any
prejudice suffered by the creditor as a result of the act, omission or
withdrawal giving rise to liability under a penalty stipulation, the court may
either reduce the penalty to an extent it considers appropriate or grant such
other relief it considers fair and just to the parties.
The first stage of the court's consideration of this
issue is to determine whether the penalty in respect of the respondent's
commission, is out of proportion with the prejudice suffered by the creditor.
This can be determined from the known facts of this case. The other two options under (2) (a) and (b)
can, only be determined from evidence specifically led for that purpose. In this case since the deposit is equal to the
respondent's commission whose facts are clear on the record it is not necessary
to consider other deductions stipulated whose consideration would have depended
on evidence which was not led in the Magistrates Court.
Section 4 (1) provides that a court can in the absence
of limitations imposed by the Act enforce penalty stipulations. In my view if the proportionality of the
penalty stipulation is apparent to the court and it can from the known facts
determine that there is no disproportionality between the penalty stipulation
and the prejudice suffered by the creditor, the court may enforce the penalty
stipulation.
The facts of this case establish that the respondent
as the creditor's agent performed his duties as an auctioneer. He caused the appellant and the Liquidator of
Conte Shoes (Pvt) Ltd to enter into a contract of sale. He fully performed his mandate in respect of
that contract. He is entitled to his
full commission of 10% of the agreed purchase price. There can be no
disproportionality if he retains the deposit of $10 000-00 paid by the
appellant. Ordering a reduction would
amount to a reduction or alteration of the auctioneer's remuneration in terms
of the contract after he had fully performed his mandate.
In the Crusader case (supra) EBRAHIM JA quoted the
case of Martin v Currie where it was
held that;
“An auctioneer is employed to sell
property by auction on the conditions arranged; if he sells the property he
gets his commission: if he does not sell the property he gets no
commission."
There is nothing unusual about an agent being paid his
commission in full after he has performed his mandate. The appellant entered
into the contract fully aware of condition 9. Yeukai Gatsi who contracted on
its behalf on p 101 of the record signed a Tender Purchase form which clearly
states “I fully understand and agree to abide by the Conditions of Sale attached
hereto.” The appellant's breach of contract if not penalised would leave the
respondent with no or inadequate remuneration for work done. There is in my
view nothing illegal about an auctioneer who has performed his mandate being
paid his commission.
There is no merit in the appellant's appeal. It is dismissed with costs.
MALABA DCJ: I
agree
GUVAVA JA: I agree
Mundia & Mudhara, appellant's legal practitioners.
Coghlan Welsh & Guest, respondent's legal
practitioners.
