“Situations are conceivable in which it is impossible to distinguish between the efforts of one agent and another in terms of causality or degrees of causation. In such a situation it may well be (it is not necessary to decide the point) that the principal may owe commission to both agents and that he only has himself to blame for his predicament for he should protect himself against that risk.”- Van den Heever JA in Webranchek v LK Jacobs & Co Ltd 1948 (4) SA 671 (A) at 678

Which property practitioner should be taken to be the effective cause of the sale where the initial introduction to the property is done by one practitioner, but the financial obstacle is eliminated by another third-party practitioner which ultimately drives the sale of the property?

Whether an estate agent now formally known as a ‘property practitioner’ is entitled to a commission will be determined first and foremost by referring to a commission agreement. Although a mandate can be provided orally, the clear presence of such a mandate by the seller to the property practitioner whether orally or in writing is required and will have to be shown by a property practitioner requiring the payment of commission. According to our common law a property practitioner is entitled to demand payment of commission from his principal provided that: the property practitioner is granted the mandate to conclude the transaction on behalf of his principal, the property practitioner has duly complied with all terms and conditions contained in the mandate and the property practitioner was the effective cause of the sale.

This article draws focus on the third common law requirement – the property practitioner being the effective cause of the sale.

As quoted above from the court in Webranchek, the approach taken by courts in deciding over cases where the property practitioner is the effective cause of the sale is well set out in the decision of the Supreme Court of Appeal in Wakefields Real Estate v Attree (666/10) [2011] ZASCA 160, (”SCA”) where the court places a trenchant emphasis that it is notoriously difficult when there are competing property practitioners to determine who is the effective cause of the sale that eventuates.

The above matter was heard a quo by the KwaZulu-Natal High Court Local Division and the judgment is later overturned on appeal which facts are briefly summarised as follows:

Wakefields Real Estate represented by Mrs. Walker (“Walker”) held a show day which was attended by Mr. & Mrs. Howard (“Howards”) looking for a bigger property.  Although the Howards were adamant that they wanted to remain in Morningside where they then resided, Walker told them of a property in Monteith Place.  The Howards were very interested in the property and by way of the facilitation of Walker visited the property twice. After much persistence by the estate agent the Howards expressed that they would not be buying a new house and due to financial difficulty would instead focus on expanding their existing home and invest in their garage business. Accordingly, the agent stopped contacting the Howards and showing the said house on the market.

Shortly thereafter, the Howards fortuitously encountered Mrs. De Marigny (“De Marigny”) who is another estate agent employed by Pam Golding Properties. When the Howards learned that De Marigny was an agent conducting business in the Durban North area, the Howards expressed that they had seen a property in the area and had really liked it. De Marigny was subsequently notified by the owners Mr. & Mrs. Attree that they have reduced the asking price of the property substantially upon which De Marigny informed the Howards and again took them to revisit the property after which a contract was concluded between the Attrees and the Howards.

The High Court relied on the Basil Elk Estates (Pty) Ltd v Curzon [1990] 4 all SA 20 (T) in concluding that the first introduction by the estate agent had been outweighed by intervening factors. Further that various personal factors had stopped the prospective purchaser in that case from concluding a sale, but nine months later the circumstances had changed and the purchaser bought the property through another estate agent- the intervening factors rendered the initial introduction unimportant.

The SCA relied on Aida Real Estate Ltd v Lipschitz [1971] 3 all SA 421 (W) as being a more instructive judgment, citing that much like the facts in Aida, where an agent had introduced a purchaser and the purchaser ultimately negotiating directly with the seller in concluding a sale, against the facts in the present case the court found that but for the introduction by Walker the Howards would not have been aware of the existence of the property in Montieth Place. It was Walker’s wisdom and business acumen that made her take the Howards to the property in Montieth Place. Much like the purchaser who approached the seller directly, the court applies the same principle in the converse stating that so too, had the Attrees approached the Howards directly and offered to sell at a lower price, the agent would have unequivocally been seen to be the effective cause of the sale.

However considering that the course of the transaction is altered slightly in that there were several intervening factors from the point of introduction to the point of conclusion of the sale, the SCA observes that the role played by De Marigny as the third-party estate agent in the transaction, although undoubtedly instrumental to the conclusion of the sale, amounted to nothing more than a phone call to the Howards arranging for them to view the house introduced to them by Walker again. Had Walker not shown the Howards the house first, it would not have been sold to the Howards through Pam Golding Properties. The court concluded that De Marigny “reaped where she had not sown” and despite her later intervention which drove the sale albeit by chance, the court’s view was that Walker’s introduction was the effective cause of the sale.

Accordingly Wakefields were entitled to commission at the rate agreed by them to be applicable – six percent, that the seller found themselves to be liable to pay more than one agent is of their own making, which is the kind of situation described by Van den Heever JA in Webranchek where he said that a seller has only himself to blame for his predicament

Although apparent from the abovementioned decision that the courts do not automatically adopt a uniform approach to determine whether a practitioner is entitled to commission as being the effective cause of the sale. In summary what is indicated by our case law in very clear terms is that the introduction by the property practitioner is important but is not the only factor considered. Courts will look at each case on its own merits and develop principles on a case-by-case basis.

Sellers are cautioned against giving mandates to multiple practitioners simultaneously as this can also lead to disputes over commission and lead them into having to pay twice for the same service.