MAKARAU JP: The facts of this application are
largely common cause. Where there is a
dispute, I do regard such as lacking sufficient materiality to deter me from
determining this matter on the legal issue that I perceive to be arising.
I
summarize the facts as follows.
In
or about October 2008, the second respondent, as estate agent, advertised
certain stands for sale on behalf of the first respondent, the seller. The applicant,
as purchaser, responded to the advertisement and identified one stand for
purchase. He was advised as to the seller's requirements and stipulations. He
met all these, including depositing the asking purchase price into the seller's
bank account, the details of which he was given by the agent. He paid the
second respondent's commission when he was asked to do so by the agent. He duly
signed an agreement of sale that was prepared by the agent.
The
agreement of sale was sent to the seller which declined to sign it alleging
that at the time it received the agreement of sale and proof pf payment of the
asking price, the property in question had already been sold to another
purchaser. Aggrieved by the stance adopted by the first respondent, the
applicant filed this application, seeking an order compelling the first
respondent to transfer the property sold to him or in the alternative, to
transfer to him an alternative property of equal value.
In
my view, the issue that falls for determination in this application is simple.
It is whether in the circumstances outlined above, the transactions between the
applicant as purchaser and the second respondent as estate agent brought into
being a valid and enforceable agreement of sale that would bind the seller
notwithstanding that the seller did not append its signature to the document
embodying the terms of the agreement. The applicant contends that the seller is
so bound and that there is a basis upon which I can compel the first respondent
as seller to transfer the land sold to him or alternatively, I can compel the
seller to transfer to him land of equal value.
Before
I proceed further, I wish to comment on the alternative relief that the
applicant is seeking in this application. He contends that if this court cannot
compel specific performance on account of the property in issue having been
transferred to a third party, the first respondent should be compelled to
transfer to him a property of equal value.
The
applicant's case is based on contract. He alleges that he has a contract with
the first respondent. He would want that contract enforced, hence the order for
specific performance, which in my view is properly sought in the circumstances
of the claim. I am not convinced that the alternative order sought in the
matter is competent. It is not a remedy that is ordinarily available as an
alternative to specific performance. From the wording of the alternative
relief, it would appear to me that the applicant was essentially seeking
damages that would have placed him in the same position he would have been had
the contract been performed.
However,
in view of the conclusion that I reach in this matter and the fact that the
alternative relief was not debated to any great length during the hearing of
the application, I make the observations out of idle curiosity and only in
passing.
From the manner in which the applicant framed
his application and heads of argument and indeed from submissions made in similar
matters that have been placed before me at trial and at pre-trial conferences,
it would appear that the relationship of an estate agent and the purchasers
that he or she identifies on behalf of the seller, bears repeating. In this
regard, without seeking in any way to down play the personal anguish that the
applicant may have felt when the first respondent refused to sign the agreement
of sale, I would suggest that the facts of this matter are common place and
represent a number of transactions that are unfolding on the market scene on a
daily basis. Prospective purchasers of land throng the offices of estate agents
in search of properties and deal exclusively with estate agents who advise them
of the terms upon which the seller will sell his or her property. Upon
satisfying these, the prospective purchasers genuinely believe they have
agreements of sale even before the seller has agreed to the sale.
I
believe that the relationship between the estate agent and the seller, whilst
not arising in this application, is a good starting point.
While
it is legally correct that an estate agent and the seller of the property are
in an agent- principal relationship, the Roman –Dutch Law of agency has since
adopted the position that obtained in English Law that places the estate agent
in a position sui generis.
Professor
Ellison Khan in an article in (1980) 97 SALJ 342, describes the estate agent as
a “legal oddity”. This is easy to understand as generally speaking, an estate
agent is not an agent strictu sensu,
clothed with authority to transact fully on behalf of his principal. An estate
agent is merely mandated to find a prospective purchaser of the seller's
property. After accepting the mandate, he is under no obligation to find the
purchaser and no action will lie against him for failing to find a purchaser or
for finding a purchaser who will not eventually go through with the sale. After
finding a prospective purchaser, he is not clothed with authority to bind his
principal in the sale agreement. Hence his oddity as an agent strictu sensu would not be thus
restricted.
In
Bird v Summerville 1961 (3) SA 194
(A) at 202C – E, a case referred to in the above cited article, HOEXTER ACJ
explains the unique position that the estate agent enjoys vis a vis the seller of the property in the following terms which I
find quite instructive:
“The estate agents on their part did
not undertake anything at all, if they wanted to earn a commission, they would
have to find a purchaser; but they could not be compelled to earn their
commission, nor, if they found a purchaser or purchasers were they bound to
introduce him or them to the appellant.
They clearly had no authority to enter into a contract of sale on behalf
of the appellant, nor could they foist on him a buyer without his consent. They
could only produce a prospective buyer but they could not force the appellant
to sell to him or sell at all; indeed the right to refuse to sell to any
prospective buyer or to choose one out of several was always that of the
appellant and the appellant only.”
In
my view, the relationship between the estate agent and the seller of the
property is aptly and concisely stated by Nugent AJA in the opening paragraph
of his judgment in Ronstan Investments (Pty) Ltd and Another v Littlewood
2001 (3) SA 555 (SCA) as follows:
“[1]
The appointment of an estate
agent to find a purchaser for immovable property in return for a commission,
without more, places the agent under no contractual obligations. The contract
is merely a promise, binding upon the principal, to pay a sum of money upon the
happening of a specified event.”
While
the estate agent assumes no obligations under his contract with the seller of
the property, equally, in this relationship sui
generis, the seller is not obliged to accept any of the sellers that the
estate agent my find. The seller is simply bound to pay the agent's commission
where the agent does find a prospective buyer. (See Bird v Summerville (supra)
above).
It
was argued before me on behalf of the applicant that the second respondent had
a mandate from the first respondent to conclude a sale with the applicant and
that he did fulfill that mandate, thereby birthing a valid and enforceable
agreement between the applicant and the first respondent. In support of this
submission, reliance was placed on the general principle of agency, found in
Willes' Principles of South African Law 7th Ed page 466 to the
effect that a principal is bound by the acts of his duly authorised agent.
As
discussed above, this is not the position at law.
It is however
accepted that an estate agent may be authorised to conclude an agreement of
sale on behalf of the seller. As stated by Lord Greene MR in Wragg v Lovett (1948) 2All ER 968,
although on the facts of the individual case, the seller may authorize the
estate agent to conclude the contract, such an authorization is not to be lightly
inferred from vague and ambiguous language.
It
is in this vein that the second respondent, in an attempt to save the
applicant's case, sought to argue that in casu,
the first respondent authorised the second respondent to conclude the agreement
of sale. In support of this submission, Mr
Machinga relied on the fact that the estate agent was authorized to accept
payments for his commission before forwarding the draft agreements of sale to
the first respondent, “for administrative purposes.”
In
Frazer v Ruwisi 1990 (2) ZLR 99 (SC),
a similar point was made and discussed relating to the payment and acceptance
of a deposit for the property being sold. It was held in that case that the
mere acceptance of the deposit of the purchase price does not take out the
estate agent from the ordinary relationship of estate agent and principal.
In
casu, however, the agent did not
receive the purchase price. He directed that the purchase price be deposited directly
into the seller's account. This was done but the fact that the purchase price had
been paid for this particular property and by the applicant was unbeknown to
the seller. The payment of the purchase price into the seller's account was
therefore neither here nor there as it had no legal impact. It could not show
that the agent had authority to conclude the sale as the agent had no authority
to even receive the purchase price or to sign the agreement.
It
is common cause that the agent asked for and received its commission from the
applicant. It is not clear from the papers why it was the applicant who had to
pay the agent's commission. I am assuming for the purposes of this judgment
that the agent merely asked the applicant to deduct the amount of the
commission from the purchase price that was deposited into the seller's
account. It has exercised my mind what to make of this transaction between the
applicant and the agent. What it is clearly not in my view, is a grant of
authority by the first respondent as seller to the agent to conclude the sale
agreement. I cannot see how the payment of the commission can be taken as the
clear and unambiguous language coming from the seller that the agent can
conclude the agreement of sale that LORD GREENE MR had in mind in the Wragg case.
In
my view, the clearest language that a seller can use to show that the estate
agent has authority to conclude the agreement of sale is to specifically
authorize the agent in the seller's mandate, to sign the agreement of sale on
behalf of the seller. Where the seller retains or reserves the right to sign
the agreement of sale, in my further view, that is clearest language that the
final word rests with the seller and the agent is but a mere estate agent.
It
appears to me that Mr Gumiro for the
first respondent had an admirably easy task in this matter. As correctly submitted
by him there was no contract between the applicant and the first respondent as
the first respondent was under no obligations to conclude a contract with
applicant even if applicant was prepared to and had actually met all the
conditions that the estate agent had told him the seller was looking for.
In
casu, I find that the applicant and
the second respondent were in an ordinary estate agent and seller relationship.
The estate agent found a prospective buyer for the property who was not only
happy to meet the conditions advised him by the agent but went further to
perform all such conditions, with the urging of the estate agent. In reality,
the seller may well have accepted the applicant as a purchaser of the property
had it been advised of the applicant in good time. The seller was however under
no legal obligation to conclude the agreement of sale with the applicant even
if it had been advised of his presence in good time.
I
have searched and fail to find a basis upon which I can vary the law of estate
agents and principals in this case. Not enough evidence has been placed before
me to justify such a finding. I fail to find that the seller had put it clearly
and in unambiguous language to the estate agent and to the world at large, that
the estate agent had authority to conclude an agreement of sale in respect of
the land in dispute.
On
the basis of the foregoing, I come to the conclusion that the second respondent
in this matter was acting as an ordinary estate agent in this matter and that
the applicant has failed to show clear language on the part of the first
respondent granting the second respondent authority to conclude a binding
agreement between him and the first respondent.
In the result, I make the following order:
1.
The application is dismissed.
2.
The applicant is to bear the costs of the application.
V S Nyangulu & Associates, applicant's legal practitioners.
Mhiribidi, Ngarava & Moyo, 1st respondent's legal
practitioners.
Machinga &
Partners, 2nd respondent's legal
practitioners,
