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Erasmus N.O. and Another v Verna van Den Blink Properties CC (A270/2014) [2015] ZAFSHC 198 (22 October 2015)

This appeal concerns the question whether a fidelity fund certificate is required for a close corporation where the latter, as estate agency, institutes a claim for commission. In the present matter the sole member of the corporation was issued with a certificate, but there was no separate certificate for the estate agency close corporation and the client argued that therefore the agency was barred from claiming commission.

Summary of the Judgement

FACTS

Verna van Den Blink Properties CC (the Estate Agency) issued summons against the Anthill Real Trust (the Trust) for the payment of commission. The Estate Agency was the effective cause of a transaction in which it had a mandate. It related to the lease of a property of the Trust to the South African Local Government Association (SALGA).

The court a quo gave judgment in favour of the Estate Agency and the Trust appealed, alleging that the Estate Agency did not have a fidelity fund certificate (FFC) as required in section 26 of the Estate Agency Affairs Act.

Section 26 determines that:

“26. No person shall perform any act as an estate agent unless a valid fidelity fund certificate has been issued to him or her and to every person employed by him or her as an estate agent and, if such person is-

(a) …

(b) a close corporation, to every member referred to in paragraph (b) of the definition of ‘estate agent’ of that corporation.”

Section 34A of Act 112 of 1976 reads as follows:

“(1) No estate agent shall be entitled to any remuneration or other payment … unless at the time of the performance of the act a valid fidelity fund certificate has been issued-

(a) to such estate agent; and

(b) if such estate agent is a company, to every director of such company or, if such estate agent is a close corporation, to every member referred to in paragraph (b) of the definition of ‘estate agent’ of such corporation.

(2) No person referred to in paragraph (c)(ii) of the definition of ‘estate agent’, and no estate agent who employs such person, shall be entitled to any remuneration or other payment in respect of or arising from the performance by such person of any act referred to in that paragraph, unless at the time of the performance of the act a valid fidelity fund certificate has been issued to such person.”

Paragraph (c)(ii) of the definition of “estate agent” reads:

“(c)(ii) any person who is employed by an estate agent as defined in paragraph (a) and performs on his behalf any act referred to in subparagraph (i) or (ii) of the said paragraph;”

The court a quo held that the Estate Agency led evidence of proof of its incorporation and that the agent and the Estate Agency had been issued with the necessary and valid FFC at the material times. This was based on the fact that the FFC that was issued to the sole member of the Estate Agency recorded:

(i) it was issued to ‘VAN DEN BLINK VERNA LOUISE’;

(ii) in her ‘capacity’ as ‘Principal (Sole Proprietor at Firm)’, and

(iii) of the ‘Close Corporation’ called ‘VERNA VAN DEN BLINK PROPERTIES trading as Sotheby’s Lew Geffen International Realty Bloemfontein’.

The court a quo thus held that there was no merit in the Trust’s submission that a separate and distinct certificate, only in the name of the close corporation was also required, as the issued certificate left no doubt about the fact that it had been issued to Ms van den Blink, in her capacity as the principal of the Estate Agency (a close corporation) specifically mentioned by name in the said certificate.

The Trust appealed and argued that a separate certificate for the close corporation, as well as one for every member was required.

HELD:

  • In the present matter, a FFC was issued to “Van den Blink Verna Louise” for the year 2011. Her capacity was stated as being “principal (sole proprietor at firm)”. At the bottom of the form the name “Van Den Blink” appeared together with Ms van Den Blink’s identity number. Clearly the certificate was issued to her, not to the CC.
  • The regulations to the Act (issued GN R 1798 of 29 August 1986) dealing with certificates determines that:

“9(1) Any company or close corporation operating as an estate agent is hereby exempted from the payment of the levy and the contribution … provided a fidelity fund certificate has been issued to each of its directors, or members contemplated in paragraph (b) of the definition of estate agent …

(2) Notwithstanding the provisions of subregulation (1), such company or close corporation shall in its own name apply in terms of these regulations for the issue to it of a fidelity fund certificate.

(3) A fidelity fund certificate referred to in subregulation (2) shall be issued free of charge and shall to the satisfaction of the board be displayed in a prominent position on the premises of the company or close corporation concerned.”

  • Regulation 9(2) thus requires that a close corporation must in its own name apply for a FFC which is issued free of charge and which certificate must be displayed on the premises of the close corporation. Even if there had been doubt as to the wording of sections 26 and 34A, the regulations make it clear that a separate FFC is required for close corporations.
  • It was not disputed that Verna van Den Blink Properties did not have a FFC issued in its own name, i.e. in the name of the close corporation, but it relied on the FFC issued to its member. This was not allowable in light of the prescripts of the Estate Agency Affairs Act and regulations issued in terms thereof.

The Trust’s appeal succeeded.

The Judgement

 

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