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De Klerk

3 October 2013

Neutral citation: Minister of Agriculture v C M De Klerk (747/2012) [2013] ZASCA 142 (30 September 2013)
Coram: Navsa ADP, Cachalia and Majiedt JJA and Van der Merwe and Meyer AJJA
Heard: 30 August 2013
Delivered: 30 September 2013
Summary: Sale – Immovable property – whether conveyancer agent of seller or of purchaser in receiving payment of the purchase consideration from purchaser before payment thereof due to seller.

Per Meyer AJA (Cachalia JA et Van der Merwe AJJA concurring):

In this case the dispute between the parties – seller and purchaser – arose from the misappropriation by the appointed conveyancer of money paid into his trust account pending the registration and transfer of immovable properties.

at "[10] The seller pleaded the sale agreement, her full performance, the purchaser’s breach in only paying to her via the conveyancers the amounts [R 650 000.00 and R178 028.80] to which I have already made reference, and she claimed payment of the unpaid balance of the purchase price (the sum of R1 001 971.50) plus interest thereon and costs from the purchaser. She further pleaded that the conveyancer was jointly and severally liable to her with the purchaser in the event of the purchaser having paid the full purchase price to the conveyancer.

The purchaser pleaded that its ‘…obligations in terms of the contract was [sic] fulfilled due to the fact that payment was made to [sic] the conveyancer’s trust account in the amounts of R1 850 000.00 on 10 October 2008 and R1 850 000.00 on 8 June 2009 respectively’ and that the seller must take her recourse in law against the conveyancer alone."

at [12] ... "counsel for the purchaser submitted that the question to be decided by the court a quo, as formulated in the pleadings, was not whether the conveyancer, in whose hands the money was misappropriated, had acted as agent of the purchaser or of the seller or of both of them in receiving and holding the purchase consideration, but instead whether the purchaser had complied with the agreement between the purchaser and the seller as to how the purchase price was to be paid. The issue in counsel’s submission was only one of performance and no question of agency arose.  However the submission of counsel for the purchaser "loses sight of the question whether payment of the purchase price to the conveyancer operated as discharge of the purchaser’s obligation to pay the purchase price."

But it was clear from the parties' pre-trial minute and the transcript of the proceedings in the court a quo that the parties and the presiding judge were alive to the central issue in this case, viz whether the conveyancer was the agent of the seller for receiving payment of the purchase price from the purchaser. If he was not, the purchaser’s defence of payment cannot succeed.

[16] Whether the conveyancer was the agent of the seller for receiving payment of the purchase price from the purchaser in this instance depends solely on the terms of the deed of sale. The conveyancer received and held the money paid over to him in terms of the sale although not as a party to the deed of sale. No other tacit or express authorisation is relied upon. I am of the view, on a proper construction of the deed of sale, that the court a quo correctly concluded that the conveyancer was not the agent of the seller in receiving payment of the purchase price.

The purchasers obligation on a plain reading of the PAYMENT OF THE PURCHASE PRICE clause (clause 4) was to pay the seller the whole purchase price in cash and the seller's right to receive payment in terms of sub clauses 4.5 - 4.7 was not unconditional. Since " the provisions of the deed of sale do not establish an express or tacit authorisation of the conveyancer to receive payment of the purchase consideration, or any portion thereof, on behalf of the seller. Payment thereof to the conveyancer was therefore not equivalent to payment to the seller and did not operate to discharge the purchaser’s obligation to pay the purchase price to the seller.  

Consequently the order of the court a quo was set aside and a substituted order made dismissing the first appellant's appeal. 

In a minority judgment Majiedt JA (Navsa ADP concurring), disagreed with the majority, the reasoning upon which it was premised and that the parties were ad idem that the central issue in the case was one of agency since agency as only raised once as an issue when the respondent testified that she had not appointed the conveyancer as her agent.  However he agreed with the view that "that a conveyancer who accepts an appointment by a seller and a purchaser becomes the agent of both parties. It is clear from the provisions referred to earlier in the context of the totality of the agreement that once the seller had met all her obligations the conveyancer was obliged to pay over all the amounts due to her. It is common cause that she had complied with all her obligations", and that when "registration had been completed, de Klerk was entitled to the money and at that stage in accordance with the deed of sale the money could only have been held on her behalf. That was the conveyancer’s mandate by both parties and he thus bore the expressly stipulated obligation to pay the money over to de Klerk."

Consequently to succeed de Klerk would have had at the very least to have proved that the money was misappropriated before registration, this was not so, therefore "in the light of the obligation undertaken by the conveyancer to pay over the money to de Klerk upon registration of transfer, [Majiedt was] unable to see what defence the conveyancer could possibly have had to a claim by de Klerk. She would also have had a claim against the Attorneys Fidelity Fund in terms of s 26(a) of the Attorneys Act 53 of 1979, on the basis of theft of moneys rightfully due to her."

Full judgment

Reader Comments: 3
Ken Mustard 03/10/2013:

I wonder why a claim was not lodged with the Fidelity Fund as that would have made the litigation unnecessary.

Bob Wynne 03/10/2013:

The Fidelity Fund adopts the view that it is the insurer of last resort and thus require a claimant to excuss the thief, up to sequestration, if necessary. This is understandable or else the Fund will be depleted while the thief retains his ill gotten loot! The correct course is to prosecute the thief and ask the criminal court to order the repayment of the money [together with interest at the legal rate] while simultaneously lodging a claim with the fund. A Conveyancer acts in a quasi-legal capacity to give effect to the contract of the parties and is agent for neither. This is borne out by the rule that if the parties subsequently litigate he may act for neither.

Abbey Naidoo 04/10/2013:

The minority contention is fraught with problems of it's own making. That the conveyancer is the agent for both parties rears up all kinds of difficulties, one of which might be a circumstantial conflict of interest. A preferable alternate view, in the absence of an express or tacit appointment, would be that a conveyancer is a neutral third party who, because of his professional expertise, expedites the transaction between the parties. The majority ruling that he is the agent for the purchaser after reference to the deed of sale and the Respondent's evidence that she did not appoint him is, in my view, correct.

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