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Villon Family Trust v Kirby (9878/2011) [2012] ZAWCHC 45 (18 May 2012)

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[11] Clause 10 of the sale agreement deals with the commission payable to the respondent and provides that:

'10. COMMISSION

The SELLER and the OFFERER acknowledge that the AGENTS were the effective cause of the sale, and the SELLER undertakes to pay the AGENTS' commission as determined between them, which will become due and payable when the Suspensive Conditions are fulfilled by the OFFERER, and will be deducted and paid from the first deposit received in terms of this Agreement. Should the OFFERER withdraw from this Contract, or fail to carry out his obligations, the AGENT shall have the right to recover such commission from the OFFERER.'

[12] The period for payment of the balance of the purchase price was subsequently extended at Mr Esau's request to 27 September 2009. However the latter still failed to fulfil his obligation to pay and in the result the applicant cancelled the sale agreement on 8 October 2009.

[13] Earlier and on 31 August 2009 the applicant wrote to the respondent requesting that R60 000,00 of the R120 000,00 paid by Mr Esau be transferred to the applicant's bank account. The relevant portion of that correspondence is as follows:

While the Trust has to wait for payment of the bulk of the purchase price until the end of September, it is entitled to the balance of the R120 000,00 which you have been holding in Trust as the only suspensive condition (conclusion of a written lease) has long been satisfied. Naturally you are entitled to hold back the R60 000,00 which will be owing to you once the buyer has performed under the agreement of sale. I would ask you please to transfer the amount of R60 000,00 to the bank account of the Trust, by EFT if at all possible, as soon as possible.' [Emphasis supplied.]

[14] The respondent failed to comply with the applicant's request and the applicant then sent him a letter of demand on 10 December 2009, advising the respondent inter alia that:

"As to the deposit he paid, in terms of the written contract, you held it in trust for the Seller "until fulfilment of the Suspensive Conditions" (clause 1.2). There were originally two suspensive conditions, but the Offeror deleted the second (clause 4). The remaining one -conclusion of a written lease - was fulfilled on 24 July 2009 (the same day that the Agreement of Sale was concluded). As from that date the Seller, and no-one else, was entitled to payment over of this amount, plus interest thereon at whatever rate was earned in the account to which it was deposited, as from the date on which it was paid over to you.

In the circumstances the Trust is entitled to and does demand payment of the amount in question from you. You are at liberty to rely on this letter to justify such payment to the Trust. But what is clear, I hope, from what I set out above, is that you are obliged to pay over the monies in question to the Trust and no other entity.'

[15] On 18 December 2009 the respondent informed the applicant that he had been contacted by Mr Esau's legal representative demanding a refund of the deposit paid and that he (i.e. the respondent) would be seeking legal advice. Although the applicant sent a reminder on 8 February 2010 the respondent only reverted eight months thereafter on 18 October 2010. In short his attitude was that in his view a binding sale agreement had been concluded and his commission was due and payable out of the deposit received. He pertinently failed to deal with the balance of the deposit which he continued to hold despite the clear terms of clause 1.2 of the sale agreement. I will return to this letter later in this judgment since it has bearing on the issue of whether the respondent had fulfilled the mandate furnished to him by the applicant.

[16] On 15 March 2011 the applicant again wrote to the respondent advising him inter alia that:

The outcome of our discussions has been that you lay claim to R60 000,00 of the deposit of R120 000,00 paid by the purchaser, one Abe Esau, in terms of a written deed of sale concluded on 24 July 2009 but have never denied liability for payment to the above Trust (the seller) of the remaining R60 000,00. As to the R60 000,00 admittedly owing to [this should presumably have read "by"] the purchaser you asked that payment be held over because of the fact that the purchaser had threatened to sue you. To the best of my knowledge that has not happened to date and I have undertaken, and hereby repeat on behalf of the Trust such undertaking, to indemnify you against any action by the purchaser.

As to your claim to half of the proceeds of the amount paid over, I have tried without success to reach some compromise in that regard so that this letter serves as notice to you to pay over the whole amount of R120 000,00, plus interest earned thereon, failing which summons will be issued for such amount plus interest at the Court rate of 15,5% per annum.

This letter, accordingly, calls upon you to pay over the amount in question within 14 court days (i.e. on or before 6 April 2011), failing which action will be instituted for payment of the said amount.' [Emphasis supplied.]

[17] In a letter dated 9 April 2011 the respondent informed the applicant that:

“I once again re-iterate that the commission was due and payable in terms of paragraph 10 of the Offer to Purchase in that the Suspensive Conditions contained in paragraph 4 had been fulfilled.

It is submitted that you should lay claim to the balance of the monies from Esau in terms of the Offer. Paragraph 9 clearly refers.

You advise in your letter dated 6 April that the facts are not in dispute but as far as I am concerned this is clearly not the case.'

[18] Clause 9 of the sale agreement to which the respondent referred sets out the applicant's rights in the event of breach by Mr Esau. Clause 9.2 provides that the applicant had the right to:

'9.2 Cancel this Agreement; repossess or claim repossession of the BUSINESS and, in addition thereto, claim payment of all instalments in arrears as well as damages for breach of contract; in the event of the SELLER exercising such right to cancel this Agreement, the OFFERER shall forfeit to the SELLER, who shall be entitled to retain as genuinely pre-estimated liquidated damages, all monies which shall have been paid on behalf of the OFFERER to the SELLER in terms of this Agreement.' [Emphasis supplied.]

[19] The applicant launched these proceedings on 17 May 2011.

Points in limine

[20] The first point taken by the respondent is that the applicant is not properly before the court. Although the respondent admits that Mr Viljoen, the applicant's managing trustee, was authorised to launch these proceedings and to depose to the affidavits filed on the applicant's behalf, he contends that the manner in which the applicant has been cited in the papers effectively non-suits it.

[21] The case heading merely reflects that the applicant is 'Villon Familietrust'. Paragraph 1.1 of Mr Viljoen's founding affidavit says that:

'1.1 Applicant is the VILLON FAMILIETRUST, a trust duly registered under number T1764/94 by the Master of the Supreme Court, Cape Town, on 16 June 1994 (Annexure "A").'

[22] Annexure 'A' is the letters of authority issued by the Master which sets out that the applicant's trustees are Mr Viljoen, Maureen Viljoen and Marlena Nieman. Annexure '6'to Mr Viljoen's founding affidavit is a resolution taken by the selfsame trustees resolving and authorising Mr Viljoen to institute proceedings on behalf of the applicant against the respondent.

[23] Paragraph 1.1 of Mr Viljoen's founding affidavit and Annexures 'A' and 'B' were admitted by the respondent, who did not even raise the issue of whether the applicant was properly before the court in his answering affidavit.

[24] The high water mark of the argument now advanced on behalf of the respondent is that the trustees of the applicant should either have been cited in their capacities as such or simply referred to as 'the Trustees for the time being' of the applicant. The respondent also contends that although a business trust may be cited under the name of the business conducted by it in terms of rule 14 of the uniform rules of court the applicant is not a business trust. I will leave this last contention there since for the reasons that follow nothing turns on it.

[25] In my view to uphold the respondent's argument would be to adopt an overly technical approach in the particular circumstances of this matter. Although it is desirable to cite the applicant in the manner contended for by the respondent, this does not mean that a failure to do so is fatal to the applicant's case.

[26] In Cupido v Kings Lodge Hotel [1999] 3 All SA 578 (E) the plaintiff sued the defendant (a trust) in its trading name only without citing the trustees in their capacities as such. The defendant's counsel argued that it was not properly before the court, submitting inter alia that unless one of the trustees is authorised by the remaining trustees all of the trustees must be joined in suing, and all must be joined when an action is instituted against the trust. He referred to an earlier edition of Honore's South African Law of Trusts as well as Goolam Ally Family Trust t/a Textile, Curtaining Textile and Trimming v Curtaining and Trimming (Pty) Ltd 1989 (4) SA 985 (C) at 988D-E and Rosner v Lydia Swanepoel Trust 1998 (2) SA 123 (W). Horn AJ could find no fault with that submission, although in Goolam Ally Family Trust the court said at 988D-E that the power of a joint trustee to 'delegate his duties to a co-trustee.. .depends on the provisions of the trust deed'. Rosner was to similar effect. In Mariola and Others v Kaye-Eddie NO and Others 1995 (2) SA 728 (WLD) at 731D-E the court cited Goolam Ally Family Trust as authority for this proposition. It is clear from that judgment that the trust deed was before the court, as was the case in both Goolam Ally Family Trust and Rosner. The trust deed has not been annexed to the papers in the present matter and the aforementioned authorities accordingly do not assist.

[27] However in Deutschmann NO and Others v Commissioner for the South African Revenue Service; Shelton v Commissioner for the South African Revenue Service 2000 (2) SA 106 (ECD) at 119F-H the full bench went further and said that:

'In relation to trusts, unless one of the trustees is authorised by the remaining trustee or trustees, all the trustees must be joined in suing. Mariola and Others v Kaye-Eddie NO and Others 1995 (2) SA 728 (W) at 731D-E. It was held in Goolam Ally Family Trust t/a Textile, Curtaining and Trimming v Textile, Curtaining and Trimming (Pty) Ltd 1989 (4) SA 985 (C) at 987J-988E, that in legal proceedings the trustees must act nomine officii. See Mariola (supra at 731E). Annexure NOM1 to the founding affidavit lists no fewer than 18 trusts as further applicants. There is no suggestion on the papers that the first applicant is a trustee of any of the trusts or that all the trustees of the trusts have authorised her to bring the application. The first applicant has clearly not established her locus standi to represent the further applicants.' [Emphasis supplied.]

[28] In casu there is far more than a mere "suggestion" that Mr Viljoen was authorised to launch the application on behalf of the trust. Annexure 'A' reflects that he is a trustee of the trust. Annexure 'B' clearly states that he is authorised to launch the proceedings on behalf of the trust. As I have said, the respondent admits this to be the case. Had the respondent wished to place this in issue he should have done so in his papers: see inter alia Tattersall and Another v Nedcor Bank Ltd [1995] ZASCA 30; 1995 (3) SA 222 at 228J-229C referring to Mall (Cape) (Pty) Ltd v Merino Ko-Operasie Bpk 1957 (2) SA 353 (CPD) at 352A-B where the court said that:

'The best evidence that the proceedings have been properly authorised would be provided by an affidavit made by an official of the company annexing a copy of the resolution but I do not consider that that form of proof is necessary in every case. Each case must be considered on its own merits and the Court must decide whether enough has been placed before it to warrant the conclusion that it is the applicant which is litigating and not some unauthorised person on its behalf. Where, as in the present case, the respondent has offered no evidence at all to suggest that the applicant is not properly before the Court, then I consider that a minimum of evidence will be reguired from the applicant (cf. Parsons v. Barkly East Municipality, supra; Thelma Court Flats (Pty.) Ltd. v. McSwigin, 1954 (3) S.A. 457(C)).'

[Emphasis supplied.]

[29] Having regard to the aforegoing and to the particular circumstances of this matter, I am satisfied that the applicant is properly before the court and the respondent's first point in limine must fail.

[30] The second point taken by the respondent is that the applicant should not have proceeded on motion because as early as 18 October 2010 (as contained in his letter to the applicant to which I referred earlier) the applicant was aware that there was a foreseeable dispute of fact about when the respondent's commission was due and payable to him. In that letter the respondent said:

'My contention remains that a binding contract was concluded and the commission was due and payable out of the deposit received. The contract / Offer to Purchase was signed on 22 July 2009 and the lease being the only Suspensive Condition was signed on the [sic] 24 July 2009.”

[31] In the same letter the respondent quoted from his correspondence with Mr Esau's

legal representative in which he had advised the latter that:

'Your client indicated that he wanted to raise some "working capital" to run the business and that he was going to raise finance from ABSA. Regrettably due to your client's poor credit worthiness - he has some 6 judgments lodged against him - no financial institution was prepared to assist.'

[32] To my mind the so-called dispute of fact relied upon by the respondent is nothing other than an interpretation of the relevant provisions of the sale agreement against the backdrop of the respondent's obligations as the applicant's agent, which is a matter of law. I say this for the following reasons. First, none of the salient facts are in dispute. Second, oral evidence on what each party understood the sale agreement to mean would be entirely unhelpful. The respondent cannot base his claim for retention of the commission op the terms of an agreement to which he was not a party and where he places no reliance on a stipulatio alter!. The simple fact of the matter is that what I am required to determine is whether the respondent fulfilled his mandate from the applicant - and to that extent only, regard must be had to the relevant clauses of the sale agreement which speak for themselves.

[33] It accordingly follows that the respondent's second point in limine must also fail.

Merits

[34] I will deal firstly with the interest now claimed by the applicant in respect of that portion of the deposit which was over and above the R60 000,00 retained by the respondent in respect of his commission, i.e. the interest on the remaining R60 000,00.

[35] As I have said it is common cause that the respondent's obligation to the applicant was to hold the deposit on the latter's behalf until fulfilment of the suspensive condition on 24 July 2009, which is when the applicant and Mr Esau entered into a lease in respect of the premises.

[36] There was no justification for the respondent to ignore, not only the applicant's request for payment on 31 August 2009, but its subsequent demands on 10 December 2009 and 15 March 2011, particularly in circumstances in which the applicant's letter of 10 December 2009 made it clear that the respondent was at liberty to rely upon the terms of that demand to justify payment to the trust; and the applicant's letter of 15 March 2011 confirmed that the trust would indemnify him against any claims by Mr. Esau.

[37] In a supplementary affidavit deposed to by the respondent in August 2011 he claimed that he had held back on paying the balance of R60 000,00 to the applicant because he was "unsure" as to whom this amount was owed; it was only after a subsequent exchange of correspondence during June and July 2011 between the respondent's attorney and the applicant's attorney that the former had assured the respondent that he could at that point accept that the applicant had indemnified him and could accordingly make payment to the applicant.

[38] This is plainly wrong since the respondent does not deny the clear and unequivocal terms of the applicant's letter of 15 March 2011. In any event, and as pointed out by the applicant's counsel, the respondent was not entitled to an indemnity by the applicant as a precondition for payment to it. The respondent admitted the provisions of clause 1.2 of the sale agreement. He admitted that the suspensive condition contained in the sale agreement was fulfilled on 24 July 2009. He was obliged to pay the "balance" of R60 000,00 over to the applicant on that date.

[39] The applicant is clearly entitled to interest on the aforementioned amount at the rate of 15.5% per annum a tempore morae from the date on which it became due, i.e. 24 July 2009 until date of payment on 11 August 2011. This amounts to R18 880.27.

[40] I turn to deal with the commission claim.

[41] The starting point is what was said in Watson v Fintrust Properties (Pty) Ltd 1987(2) SA 739 CPD at 743 I - 744 B:

"(T)he question of onus in this context seems to me to be settled, on principle, by these considerations:

(i) The service expected of the agent is the introduction of a person who is able, financially and legally, to purchase, and who is willing to purchase {Law of South Africa vol 9 at 150 para 306 ad note 2);

(ii) the question whether the purchaser is able (and willing, I assume) is one of fact (ibid ad note 6; Macks v Recond 1955 (2) SA 234 (C) at 238G, citing James v Smith [1931] 2 KB 317 at 322);

(iii) the general rule is that he who asserts must prove (Jones and Buckle Civil Practice

of the Magistrates' Courts in South Africa 6^th ed at 586 para 2 ad note 49); and so if the agent asserts that he has introduced a willing and able buyer he must prove that assertion. In Wacks v Record at 238 Ogilvie Thompson J (as he was) said that 'find a purchaser' meant 'find a purchaser who is ready and able to buy'; that was the event entitling the agent to commission; and the onus lay on him to satisfy the Court that that event had occurred."

[42] The parties can however vary the terms on which payment of commission will be due but then their intention must be expressed with sufficient clarity: Vesta Estate Agency v Schlom 1991(1) SA 593 CPD 596 G - 597 A and the authorities referred to therein. In Vesta the Court found that the seller and the purchaser had stated "clearly and unambiguously" that the seller would pay the agents commission "as a result of concluding this agreement of sale". That agreement had been accepted by the agent whose representative had signed the agreement "for and on behalf of Vesta Estate Agency (Pty) Ltd who accepts the stipulatio alteri in its favour". The Court found that this created a binding agreement to pay the commission and was not dependent on the purchaser fulfilling his obligations under the agreement.

[43] In casu the respondent was not a party to the sale agreement. Clause 10 (the commission clause), while providing that the commission will be due and payable upon fulfilment of the suspensive condition, also stipulates that in the event of the purchaser withdrawing from the agreement or failing to carry out his obligations, the respondent would have the right to recover his commission from the purchaser.

[44] The respondent's counsel correctly submitted that the right to recover does not mean a duty to recover. That however is not the point. Clause 10 alerted Mr. Esau and not the respondent to the consequences of his withdrawal from, or breach of, the sale agreement insofar as the respondent's commission was concerned.

[45] Further, clause 9.2 (the cancellation clause) specifically provides that in the event of the applicant cancelling the sale agreement as a result of breach thereof by Mr. Esau, all amounts paid by the latter would be forfeited to the applicant - that is, the full amount of R120 000. There would have been no purpose for such a provision if the terms of the mandate were those alleged by the respondent, and it goes without saying that I am obliged to have regard to the terms of the sale agreement as a whole. There is also the letter sent by Mr Viljoen to the respondent on 31 August 2009 wherein he confirmed that the respondent's commission would be "owing" only once Mr Esau had performed under the sale agreement.

[46] It accordingly cannot be said that the respondent's version was expressed with sufficient clarity by the parties as was the case in Vesta and the common law principles must thus apply (see also Jurgens Eiendomsagente v Share 1990(4) SA 664 AD at 675 H - I). The onus rests on the respondent to prove that he introduced a willing and able purchaser (in the form of Mr Esau) to the applicant in accordance with the principles set out in Watson supra.

[47] On his own version the respondent has failed to discharge this onus. In his letter to the applicant of 18 October 2010 he confirmed that Mr Esau had informed him that he needed to raise working capital to run the business which he had offered to purchase -and it is obvious that working capital would have been required, whether it had to be raised on loan finance or not - but that due to Mr Esau's poor credit worthiness no financial institution was prepared to assist.

[48] The respondent claims that he only discovered that Mr Esau was unable to raise the working capital after conclusion of the sale agreement. However, nothing turns on this for the simple reason that Mr Esau was unable to raise that working capital as a fact. The respondent knew from the outset that Mr Esau only intended following through on the sale if he was successful in raising working capital and accordingly this was a fundamental component of his willingness and ability to purchase the applicant's business. That the issue of the working capital was not incorporated in the sale agreement does not detract from the obligation placed upon the respondent to fulfil his mandate from the applicant. In addition, and again as a matter of fact, Mr Esau did not perform his obligations under the sale agreement.

[49] The respondent is thus not entitled to his commission, nor was he entitled to retain the sum of R60 000 on account of that commission as from the date upon which the applicant cancelled the sale agreement, being 8 October 2009.

Costs

[50] Since the applicant has been successful in the relief sought, costs should follow the result.

[51] The respondent's counsel submitted that in the event of the applicant being successful, the latter should only be entitled to costs on the Magistrates Court scale as from 13 August 2011, two days after the respondent paid the balance of the deposit of R60000 to the applicant (apparently because it would have taken two days for the funds to reflect in the applicant's account). I disagree. The applicant was entitled to pursue the remainder of the relief sought in the same proceedings pending in this Court and the respondent's counsel conceded that the payment that was made was as a result of these proceedings.

[52] During argument the applicant's counsel advised that it does not persist with a punitive costs order in respect of the supplementary affidavits filed. This is correct since the fact of the payment of R60 000 referred to in those affidavits would in any event have had to have been brought to the attention of the Court.

Conclusion

[53] In the result I make the following order:

1. The respondent shall pay to the applicant the sum of R60 000 plus interest thereon at the rate of 15.5% per annum a tempore morae from 8 October 2009 to date of payment.

2. The respondent shall pay to the applicant the sum of R18 880,27.

3. The sums referred to in paragraphs 1 and 2 above shall be paid to the applicant within 7 days from date of this order.

4. The respondent shall pay the costs of this application.

J I CLOETE