The case revolved around a written joint mandate concluded on 1 September 2021 between RE/MAX, Mr and Mrs Smith (Smiths) and Kapstadt Properties for the marketing and finding of a purchaser for the property belonging to the Smiths. The mandate provided that in the event that the property was sold by RE/MAX or sold to any other person introduced by RE/MAX during the mandate period, RE/MAX, as the effective cause of the sale, would be entitled to commission calculated at 3,5% plus value-added tax of the purchase price achieved. The mandate would be in force until 17h00 on 30 April 2022.

In November 2021, RE/MAX approached one of its existing clients, Mr Pears, to ascertain whether he wished to view the property. Several viewings of the property subsequently took place, with Pears eventually making an offer to purchase the property, but which offer ultimately fell short of the Smiths’ asking price. A representative from RE/MAX advised Pears that the Smiths had received a higher offer from an American purchaser, which the Smiths had accepted. The American purchaser, who was introduced to the Smiths by Kapstadt Properties, subsequently abandoned the proposed sale in February 2023 as he was unable to fulfil the terms of the transaction due to an unforeseen change in his personal circumstances. Thereafter, around February 2023, the Smiths eventually accepted a revised offer from Pears for the purchase of the property via  Kapstadt Properties.

The court was called upon to determine:

• the terms of the mandate provided by the Smiths to RE/MAX;
• whether RE/MAX performed in terms of the mandate; and
• whether RE/MAX was the effective cause of the sale of the property to Pears.

RE/MAX sought relief not from Kapstadt Properties but from the Smiths for the commission, despite Kapstadt Properties’ contentions that (i) the property was sold more than 90 days after the mandate period had expired; (ii) RE/MAX was not marketing the property any longer at the time of the sale; and (iii) motion proceedings were not suited to settle the dispute around what it termed an interpretive dispute, which should have been ventilated at trial. In their dealings with Kapstadt Properties, the Smiths sought an indemnity from them in respect of any claim by RE/MAX for commission.

Findings

In analysing the case before it, the court found that Kapstadt Properties’ contentions were meritless on the basis that the Smiths were, inter alia, acutely aware of the circumstances surrounding the sale of the property and that as an established canon of interpretation, the starting point in interpreting any document is the language of the document in question read in context and having regard to the purpose of the provision and the background to the preparation and production of the document. With the language being clear and with the facts being common cause, there was no dispute of facts and the only dispute was who was the effective cause of the sale. Pertinently, the court reconfirmed the effective cause requirement by stating that it is met when (i) an estate agent introduces a purchaser to a property and (ii) the agent is mandated at the relevant time.

In expanding on its reasons, the court found that on the facts before it, RE/MAX was the effective cause of the sale in that it introduced Pears to the Smiths within the mandate period as the principal, and but for RE/MAX, the property would not have been purchased by Pears from the Smiths.

The court further noted that an alternative dispute mechanism should have been used to resolve the matter in a quick and cost effective manner.

This case highlights the importance of parties to a sale of property agreement being alive to the requirements regarding estate agent’s commission, and that they must carefully consider clauses in mandates to ensure that they are clearly drafted. Moreover, and should there be a dispute on similar facts, mediation or some other alternative dispute mechanism should first be considered to resolve the dispute in question.