Stopforth Swanepoel & Brewis Inc v Royal Anthem (Pty) Ltd and Others

• Jurisdiction: South Africa
• Citation: 2015 (2) SA 539 (CC)

Stopforth Swanepoel & Brewis Inc v Royal Anthem (Pty) Ltd and Others
2015 (2) SA 539 (CC)

2015 (2) SA p539

Citation	2015 (2) SA 539 (CC)
Case No	CCT 63/2014; [2014] ZACC 26
Court	Constitutional Court
Judge	Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Leeuw AJ, Madlanga J, Nkabinde J, Van Der Westhuizen J and Zondo J
Heard	October 2, 2014
Judgment	October 2, 2014
Counsel	No counsel details supplied

Flynote : Sleutelwoorde

Constitutional law — Human rights — Right of access to courts — Right to fair public hearing — Appeal court amending trial court's order to detriment of non-party — Violating non-party's right to procedural fairness — Constitution, H s 34.

Conveyancer — Rights and duties — Liability — Failed sale — Funds in trust account — Liability of conveyancer to refund buyer where forfeiture clause invoked by seller — Conveyancer acting as agent of seller — Payment to conveyancer amounting to payment to seller — Seller, not conveyancer, liable to buyer. I

Headnote : Kopnota

Royal, the seller in a failed sale of immovable property to the second and third respondents (the buyers), invoked a forfeiture clause in the contract of sale and refused to restore the deposit and transfer duty payments to the buyers. These funds were held in the conveyancers' interest-bearing trust account J

2015 (2) SA p540

A as mandated by s 78(2A) of the Attorneys Act 53 of 1979. Royal instructed the conveyancing attorneys (SSB) not to refund the buyers. Frustrated, the buyers sued Royal and SSB in a high court for repayment of the funds in question. SSB indicated that it would abide by the court's decision and the buyers withdrew their action against it. Meanwhile the funds remained in SSB's trust account. The high court found in favour of the buyers and B ordered Royal to repay the funds plus interest at 15,5% (the prevailing legal rate). In an appeal the SCA upheld the high court's decision but remarked that because the funds were kept by SSB, it should be ordered to refund the buyers. The SCA accordingly amended the high court's order to direct SSB to repay the capital sum plus interest at 15,5%, which was higher than the interest earned in SSB's trust account. SSB applied for leave to appeal to C the Constitutional Court. It asked the CC to rescind the SCA's order on the ground that it was granted by default in proceedings to which SSB was not party, thereby infringing its constitutional right to a fair public hearing.

Held: Leave to appeal would be granted because the application not only raised the constitutional issue of SSB's right to a fair public hearing but could have implications for conveyancing attorneys. The SCA had, without affording it D a hearing, ordered SSB to repay funds it had received on instruction of a client (Royal) and deposited in a trust account in accordance with statutory prescriptions. Moreover, it had ordered SSB to pay back a greater amount of interest than the funds were earning in the trust account. The fact that SSB was holding the funds did not justify the imposition of such liability on it: the payment into SSB's trust account should have been regarded as payment E to Royal as its principal. Hence both procedural and substantial fairness were violated by the SCA's order. The appeal would be upheld and the order of the SCA amended to provide that Royal repay the money paid in respect of the failed sale agreement plus legal interest, as well as the interest that had accrued on the funds. (Paragraphs [18], [24] – [25] and [30] – [31] at 546G – I, 548D – G and 549C – H.)

Cases Considered

Annotations F

Case law

De Lange v Smuts NO and Others 1998 (3) SA 785 (CC) (1998 (7) BCLR 779; [1998] ZACC 6): dictum in para [131] applied

Royal Anthem Investments 129 (Pty) Ltd v Lau and Another 2014 (3) SA 626 (SCA) ([2014] ZASCA 19): order varied on appeal G

Van Huyssteen and Others NNO v Minister of Environmental Affairs and Tourism and Others 1996 (1) SA 283 (C) (1995 (9) BCLR 1191): dictum at 304G – H applied.

Statutes Considered

Statutes

The Attorneys Act 53 of 1979, s 78(2A): H see Juta's Statutes of South Africa 2013/14 vol 7 at 5-126

The Constitution of the Republic of South Africa, 1996, s 34: see Juta's Statutes of South Africa 2013/14 vol 5 at 1-30.

Case Information

An application for leave to appeal and an appeal from a decision in the I Supreme Court of Appeal.

Order

1.

Leave to appeal is granted.

2.

The appeal is upheld.

3.

The order of the Supreme Court of Appeal in paras 1 and 2 is set J aside and replace with the following:

2015 (2) SA p541

'1.

The first respondent, Royal Anthem Investments 129 (Pty) Ltd, A is ordered to pay the second and third respondents, Yeun Fan Lau and Shun Cheng Liang—

(a)

the sum of R720 000;

(b)

the sum of whatever interest accrued on the said sum of R720 000 pursuant to its investment in an B interest-bearing account calculated up to and including 9 December 2009;

(c)

interest on the sum of R720 000 calculated at the legal rate of 15,5% per annum from 10 December 2009 to date of payment.

2.

The first respondent, Royal Anthem Investments 129 (Pty) Ltd, C is ordered to pay the second and third respondents, Yeun Fan Lau and Shun Cheng Liang, the sum of R264 723 together with interest thereon calculated at the legal rate of 15,5% per annum from 29 June 2011 to date of payment.'

Judgment

Nkabinde J (Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J, D Jafta J, Khampepe J, Leeuw AJ, Madlanga J, Van der Westhuizen J and Zondo J concurring):

Introduction E

[1] This is an unopposed application for leave to appeal against a decision of the Supreme Court of Appeal. It arises in the aftermath of litigation in the North Gauteng High Court, Pretoria (the high court). The dispute arose out of the terms of a failed sale agreement of immovable property between the first respondent, F Royal Anthem Investments 129 (Pty) Ltd (Royal), and the second and third respondents, Yeun Fan Lau and Shun Cheng Liang (the respondents).

[2] The applicant, Stopforth Swanepoel & Brewis Inc (the attorneys), and Royal were sued, as defendants, in an action for the recovery of certain funds paid by the respondents to Royal but which were held in G trust by the attorneys. As will become evident later in this judgment, the action was withdrawn against the attorneys. The high court ordered Royal to repay the funds plus interest. The litigation culminated in an appeal by Royal to the Supreme Court of Appeal. [1] The attorneys were not a party on appeal to the Supreme Court of Appeal. That court H nevertheless amended the restitution order of the high court against Royal and ordered the attorneys to repay the funds plus an increased amount of interest accrued thereon. The order on appeal is the subject- matter of this application.

Factual background

[3] The factual background, dealt with in the judgment of the I Supreme Court of Appeal, need not be repeated here. It suffices to recapitulate the

2015 (2) SA p542

Nkabinde J (Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Leeuw AJ, Madlanga J, Van der Westhuizen J and Zondo J concurring)

A facts giving rise to this application. The respondents agreed to purchase a certain immovable property from Royal and pay it the sum of R3,6 million. The attorneys were the conveyancers in respect of the agreement.

[4] The relevant terms of the agreement were that (a) the respondents B were to pay the deposit into the attorneys' account; (b) the attorneys were obliged to invest the funds, for the benefit of the respondents, in an interest-bearing trust account in terms of s 78(2A) of the Attorneys Act [2] (Act); and (c) the funds were to be paid over to Royal on the date of registration of the property in the name of the respondents. [3] In terms C of clause 3.3 the agreement would fall through if any condition thereof remained unfulfilled. To that end the deposit with interest would be refunded to the respondents.

[5] The amounts of R720 000 for the deposit and R264 723 in respect of transfer duty were transferred to the attorneys by the respondents. These D amounts were merely kept in trust by the attorneys and invested in an interest-bearing trust account with Nedbank pending registration of transfer. It appears, however, that at some stage the attorneys paid the necessary duty to the South African Revenue Service (Sars) to facilitate registration of transfer, which was seemingly delayed. Soon after the sale fell through. This happened when the attorneys had, at the behest of E Royal, demanded a substantial sum of interest in respect of the delayed transfer. The respondents refused to pay the interest and demanded a refund for the reason that the sale had lapsed in July 2009 through non-fulfilment of a condition. Royal denied this. When the funds remained unpaid, the respondents instituted action in the high court against both the attorneys and Royal.

High-court proceedings F

[6] The attorneys abided by the decision of the court. The respondents withdrew the action against the attorneys and proceeded to trial against

2015 (2) SA p543

Nkabinde J (Mogoeng CJ, Moseneke DCJ, Cameron J, Froneman J, Jafta J, Khampepe J, Leeuw...