WERE YOU THE EFFECTIVE CAUSE OF A SALE?

In the 2011 matter of Wakefields Real Estate (Pty) Ltd v Attree and Others 2011 (6) SA 557 (SCA), the Supreme Court of Appeal had to decide which agent had been the effective cause of a sale. The facts are summarised as follows: in 2004, the respondents in this matter had thought of placing their property on the market. An agent, the appellant, bought potential buyers to view the property. A buyer indicated interest but stated that the property was too expensive.  The third respondent encountered an agent employed by another agency (“Pam Golding Properties”) and informed the Pam Golding agent that they liked the 1st respondent’s property, but it was too expensive. Thereafter, in 2005, the 1st Respondents reduced the property’s sale price and remarketed it through other agencies, one of whom was the Pam Golding agent and informed them of the reduced price. That agent recalled the third respondent’s expression of interest in the property and phoned her to tell her that the price had been reduced. The third respondent made an offer on the property, which offer was accepted by the 1st Respondents. The commission of R150 000 was shared by Remax, which had the sole mandate, and Pam Golding, which claimed that it was the effective cause of the sale. The Appellant disputed this and, after losing the case in the High Court, brought the appeal.

An estate agent will be considered the effective cause of the sale / transaction if he or she can illustrate conclusively that his or her efforts constituted the actual or dominant cause which triggered the transaction. This must be self-evident and conclusive notwithstanding any other factors and/or agents. The so-called causa sine qua non or  “but for the actions the matter would never have happened” is not a conclusive test. A two-step test should rather be used, as follows:

  1. All factors and/or efforts must be identified which contributed to brining the transaction to fruition. The factors should be said to have caused the transaction without having necessarily being the effective cause;
  2. Secondly, determine which factor or effort, from the view of a reasonable person, played the most significant or crucial factor in finalising the sale. The factor or effort would then constitute the effective cause.

The above involve the application of common sense or a reasonable man approach and that all facts must be considered and evaluated together, each factor given due weight and consideration. If in the cumulative, the actions of the agent are shown to have had or brought the transaction to finalisation.

The court, above, showed that the actions of the Appellant had led to the sale. That, albeit the Appellant had not been involved with the sale the second time around, it had had introduced “effectively” the parties to one another. The Pam Golding agent had been aware that the purchasers had originally wanted the property, but could not afford it when the property had originally been placed on the market. They would have bought it had it not been priced so highly. When the 1St respondents decided to relist the property at a lower price, they informed an agent that was aware that the purchaser had originally expressed interest, but, due to the price, did not proceed. Thus, with a lower price, the original impediment was removed and the purchaser was persuaded to purchase the property. The 1st Respondents accepted the offer, which then finalised the transaction. If we were to apply the above two-step approach to the facts it can be shown that:

  1. The Appellant had shown the property to the purchaser who was interested in the property, but, due to financial concerns, could not proceed. The purchaser then proceeded to inform another agent of their interest, which agent then, when the property re-entered the market, proceeded to contact the purchaser to review the property.
  2. The factor that had played, in the writer hereof’s humble opinion, was the original introduction of the property to the purchaser by the Appellant. That a reasonable person would deduce that, but for the price, the property would have been sold to the purchaser by the 1st Appellant and not the other agents.

The Supreme Court held that the Appellant, upon a review and determination of the evidence, confirmed that the Appellant was in fact the due effective cause of the transaction and that the 1st Respondents had to pay commission to the appellant. Thus resulting in double commission liability that the 1St Respondents had to pay. Agents should be cognisant of the above case and ensure that, when signing a mandate or working on a joint listing, to enquire from the Seller if any other agency has or was involved in the listing previously.

Contact the ESI team for any queries regarding double commission and what to do if this should occur.

Resource: Wakefields Real Estate (Pty) Ltd v Attree and Others 2011 (6) SA 557 (SCA)

Delport, Henk, Estate Agents’ Commission: ‘Effective Cause’ Explained (August 5, 2010). Journal of Contemporary Roman-Dutch Law, Vol. 73, p. 589, 2010. Available at SSRN: https://ssrn.com/abstract=1905453