Eileen Louvet Real Estate (Pty) Ltd v Afc Property Development Co (Pty) Ltd

• Jurisdiction: South Africa

Eileen Louvet Real Estate (Pty) Ltd v Afc Property Development Co (Pty) Ltd
1989 (3) SA 26 (A)

1989 (3) SA p26

Citation	1989 (3) SA 26 (A)
Court	Appellate Division
Judge	van Heerden JA, Grosskopf JA, Nicholas AJA
Heard	March 10, 1989
Judgment	March 23, 1989

Flynote : Sleutelwoorde

Principal and agent — Estate agent — Mandate — Termination of — Question whether sole mandate to sell property may be terminated at G will by owner important in so-called sole agencies — Mandate for specific period cannot be terminated during its currency — Should owner purport to revoke a mandate, agreement not terminated — Should agent perform services or show that, but for act of owner frustrating performance, he would have earned the commission, he will be entitled to H commission or damages — Mere conferment of sole agency does not give rise to such claim should owner sell property without intervention of agent — Position different if sole authority created.

Principal and agent — Estate agent — Commission — Claim for payment of commission — Contract providing 'if during the period of I the sole mandate the property/stands/units is/are sold by me or any other person (the owner)... shall be liable to pay commission' — Owner selling block of land for R1,8 million and raising defence that director had terminated realtor's mandate by implication — Court a quo upholding defence — Court on appeal finding that in accordance J with the general rule of efficacy of contracts, agreement

1989 (3) SA p27

A could only be terminated by owner on reasonable notice — Owner had sought to rely on unilateral amendment as distinguished from unilateral termination — No reasonable notice given — Owner failing to allege or prove agreement validly terminated — Agent entitled to commission — Appeal succeeding. B

Headnote : Kopnota

The question whether an agreement (conferring an agency to a realtor to sell property on behalf of the owner) may be terminated at will by the owner becomes important in cases of so-called sole agencies. If the mandate was conferred for a specific period, the agreement of mandate may obviously not be terminated during its currency. Should the owner in such case purport to revoke the mandate, the agreement will not be terminated, and should the agent perform the agreed services, or show that, but for an act of the owner frustrating the performance of C the services entitling him to payment of commission, he would have earned the same, the realtor will be entitled to commission or damages as the case may be. Of course, the mere conferment of a sole agency does not give rise to such a claim should the owner sell the property without the intervention of any agent. The position may be different if a sole authority is created.

D On 31 August 1982, M, a director of respondent owner, gave a sole agency to L, a realtor (estate agent) to sell plots from a block of land which was to be subdivided into 26 stands, measuring 2 000 square metres each. In terms of a written agreement, it was stipulated that 'if during the period of this sole mandate, the property/stands/units is/are sold by me or any other person, then (the owner) shall be liable to pay... commission at the rate... calculated on the price at which the property/stands/units is/are sold'. Respondent sold three stands to purchasers introduced by the appellant and then itself sold the E entire remaining block of land for R1,8 million. Appellant claimed commission of R64 750. In an action in a Local Division for the payment of such commission, the respondent raised the defence that prior to the sale of the block of land, the respondent, represented by M and/or F, terminated appellant's mandate during a meeting at which all the parties were present. The Court a quo accepted this defence. It held that the mandate had been revoked by F who terminated the agreement by F implication (even though he neither knew nor intended to terminate it). In an appeal,

Held, that the written agreement was not a contract of agency but was intended to confer 'a right' to introduce prospective purchasers: that mandate was not granted for a specific period.

Held, further, that the agreement did, however, confer upon the appellant the sole and exclusive right to sell the properties, and furthermore provided that 'if during the period of the sole mandate' G the properties were to be sold by the respondent or any other person the appellant would be entitled to commission with reference to the purchase price.

Held, further, that, if the agreement was to be construed as entitling the respondent to terminate it summarily, it would be practically speaking worthless: the right to commission preserved in the last paragraph could be frustrated by unilateral termination on the part of respondent before the conclusion of the sale; and this it would H be entitled to do even if appellant had gone to considerable expense in procuring the prospective purchaser, and even if the appellant was on the point of introducing such a purchaser.

Held, further, that, in accordance with the general rule applicable to agreements having efficacy for an unspecified period, the agreement under consideration could only have been terminated by the respondent on reasonable notice.

I Held, further, on the facts, that the respondent had not pleaded that the agreement had been terminated by reasonable notice nor did the evidence establish that such notice had been given.

Held, further, that it had not been suggested that a summary termination of the agreement in this case could be regarded as reasonable: hence the respondent had failed to allege or prove that the agreement had been validly terminated.

Held, further, that respondent had sought to rely upon a unilateral J amendment as distinguished from a unilateral termination of the agreement.

1989 (3) SA p28

A Held, accordingly, that appellant was entitled to commission of R64 750 plus costs. Appeal allowed.

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