“People are entitled to walk our streets without having to fear being attacked by dogs and, where such attacks occur, they should in most circumstances be able to look to the owner of the dog for recompense” (extract from judgment below)

Dog owners (in fact owners of any potentially dangerous domesticated animal) should take note of the Supreme Court of Appeal (SCA)’s recent refusal to extend the legal defences open to you if you are sued for injuries and losses caused by your animal.

Your risk is substantial – the dog owner in this case is being sued for R2.3m.

Three dogs savage a passer-by

• An “itinerant gardener and refuse collector”, making his peaceful way down a suburban street and pulling the trolley in which he collects refuse, was attacked by three dogs for no reason, and without any warning.
• The dogs savaged him to such an extent that neighbours who came to the scene thought he was dead. He survived, but his left arm was amputated as a result of his injuries. 
• Sued for R2.341m in damages by the victim, the dog owner raised a variety of defences, but the important aspect for most of us is the SCA’s decision regarding his defence which boiled down to “the injuries weren’t my fault”.

Pauperian liability – liability without fault

Which brings us to the nub of your risk – you can be held liable on a “strict liability” or “no fault” basis. You can be sued even if you were in no way negligent.

That’s very different to most other types of liability for damages, where you are – with just a few exceptions – only at risk if you are proved to be at fault. As unfair as that may sound at first blush, there is solid reasoning behind it: “…the reality is that animals can cause harm to people and property in various ways. When they do so and the victim of their actions is innocent of fault for the harm they have caused, the interests of justice require that as between the owner and the injured party it is the owner who should be held liable for that harm.” 

That concept goes back millennia to pre-Roman laws, and our modern law continues to apply this no-fault principle in respect of domesticated animals as “pauperian liability” (“actio de pauperie” to lawyers).

This is a complicated area of law, involving much judicial interpretation of both old and modern laws, and professional advice specific to your case is essential. In a nutshell however you are liable “if the animal does damage from inward excitement or, as it is also called, from vice … its behaviour is not considered such as is usual with a well-behaved animal of the kind.”

SCA: The three defences open to you remain limited

The three limited defences that have always been available to you are –

1. The victim “was in a place where they were not entitled to be” – for example  “a housebreaker bitten by a watch dog [or] where the animal was chained to restrain it and the injured party ventured within reach … However, in general, if the harm occurred in a public place, such as a public street, the owner would be liable.” 
   
2. “The injured party or a third party provoked the attack by goading or provoking the animal.”
   
3. Another person (perhaps a dog-sitter, dog walker or boarding kennel for example) had taken “custody or control” of the animal and failed through negligence to control it resulting in it injuring the victim. The claim then would be against the other person and not against you as owner. 

The dog owner here asked the Court to extend that third defence by taking away the “custody or control” requirement, so that negligence by another person not a custodian of the dog would still be a defence open to the owner. That would have given the owner a glimmer of hope with his speculative defence that that he had left the dogs behind a locked gate and “an unknown intruder must have attempted to gain access to the property via the gates and in doing so damaged the two padlocks … In turn this enabled the dogs to escape…”.

Bottom line (after much learned analysis of the law and constitutional considerations) – the Court declined to extend the third defence and your strict liability risk remains undiminished.

Control your dogs and check your insurance policies!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“By failing to prepare you are preparing to fail” (Benjamin Franklin)

The media is still awash with warnings about the dangers of not complying with POPIA (the Protection of Personal Information Act). The risks of non-compliance are indeed substantial but whilst much is made of the fact that the Act itself is now in force, references to the one-year grace period for compliance expiring on 30 June 2021 appear only in the fine print (if at all).

But – and this is a big but – there are major benefits to understanding POPIA and starting the compliance process long before it becomes compulsory. The penalties for getting it wrong are sizeable, “preparation makes perfect”, you are giving yourself lots of time to get it right, and for many businesses there is also good marketing potential in being able to tell your customers and clients that you are already addressing the situation.

Four practical steps to start with…

Before we start on your action plan, get to grips with the fact that you will almost certainly have to comply fully with POPIA. As soon as you in any way “process” (collect, use, manage, store, share, destroy and the like) any personal information relating to a “data subject” (customers, members, employees etc etc), you are a “responsible party”. Very few businesses will fall outside that net. Equally you are unlikely to fall under exemptions like that applying to information processed “in the course of a purely personal or household activity”. Get going with these steps –

1. Assess what personal information you hold, how you hold it, and why: Figure out what personal information you currently hold, how you hold it, and why you hold it. To collect and “process” such information lawfully you need to be able to show that you are acting lawfully, reasonably in a manner that doesn’t infringe the data subject’s privacy, and safely.   
   
   You must show that “given the purpose for which it is processed, it is adequate, relevant and not excessive”, data can only be collected for a specific purpose related to your business activities, and can only be retained so long as you legitimately need to or are allowed to keep it.   
   
   There’s a lot more detail in POPIA, but you get the picture – you cannot collect or hold personal information without good and lawful cause.
   
2. Check security measures, know what to do about breaches: You must “secure the integrity and confidentiality of personal information in [your] possession or under [your] control by taking appropriate, reasonable technical and organisational measures to prevent … loss of, damage to or unauthorised destruction of personal information … and unlawful access to or processing of personal information.” You are going to have big problems if there is any form of breach from a risk that is “reasonably foreseeable” unless you can prove that you took steps to “establish and maintain appropriate safeguards” against those risks. Bear in mind that whilst cyber-attacks tend to get the most media time, there are also other risks out there – brainstorm with your team all possible vulnerabilities and patch them.  
   
   Any actual or suspected breaches (called “security compromises” in POPIA) must be reported “as soon as reasonably possible” to both the Information Regulator and the data subject/s involved.   
   
   If third parties (”operators”) hold or process any personal information for you, they must act with your authority, treat the information as confidential, and have in place all the above security measures.
   
3. Check if you do any direct marketing: Most businesses don’t think of themselves as doing any “direct marketing”, but the definition is wide and includes “any approach” to a data subject “for the direct or indirect purpose of … promoting or offering to supply, in the ordinary course of business, any goods or services to the data subject…”. So for example just emailing or WhatsApping your customers about a new product or a special offer will put you firmly into that net. 
   
   If your approach is by means of “any form of electronic communication, including automatic calling machines, facsimile machines, SMSs or e-mail”, you must observe strict limits. Whilst you can as a general proposition market existing customers in respect of “similar products or services” (there are limits and recipients must be able to “opt-out” at any stage), potential new customers can only be marketed with their consent, i.e. on an “opt-in” basis. 
   
4. Get a start on procedures and training: Identify an “Information Officer” who will take on all compliance duties, establish procedures, and train your team in implementing them. Cover how you will collect the data, process it, store it, for how long, for what purpose/s and so on. What consent forms do you need and when/how are they to be completed and stored? You are much less likely to have a POPIA problem if everyone in your business (and most importantly you!) understands what your procedures are and implements them as a matter of course. Make sure that no functions “fall between two stools” – assign individual compliance tasks to named staff members and make sure everyone understands who is to do what.

This is a complex topic and there is no substitute for tailored professional advice. What is set out above is of necessity no more than a simplified summary of a few highlights.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“Compliance with court orders is always important. There is a particular scourge in this country of spouses, particularly husbands, failing to pay judicially ordered maintenance” (extract from second judgment below)

Getting money out of serial maintenance defaulters is a notoriously difficult exercise, but even the most recalcitrant and cunning dodger will baulk at the prospect of being locked up for contempt of court.

And our courts, mindful of their position as “upper guardian” to all children, have shown again and again that they will have no hesitation in acting firmly against the sort of bad-faith defaulters we are talking about.

What must you prove?

You must prove not only a deliberate breach of the court order, but also that the breach was “wilful” and in bad faith. Although normally in non-criminal matters the standard of proof required is “on a balance of probabilities”, in contempt proceedings you have to prove bad faith on the much higher standard required for criminal convictions i.e. “beyond reasonable doubt”. 

As the Court in the second case below put it: “If, on a conspectus of all the evidence, it is a reasonable possibility that the husband’s non-compliance was not wilful and mala fide, he cannot be subjected to criminal sanctions for contempt.”

Of course, genuine inability to pay, which is no doubt more common now than it was before the COVID-19 lockdown, is a different matter altogether. We are talking here about dodgers who are able to pay but refuse to do so. A defaulter who simply cannot pay should apply for a variation of the court order. If the order stands, payment must be made – end of story.

Two recent High Court decisions illustrate –

First case: A “brazen” defaulter’s choice – pay or go to jail 

• A father had been ordered, per a 2017 divorce settlement agreement, to pay R15,000 p.m. maintenance for his two minor children. He stopped paying in early 2018 and by the time this matter reached court he had run up arrears of R537,499. 
• In response to the mother’s application to have him jailed for contempt of court, the father pleaded poverty – a standard ploy.
• The Court was having none of that, and the mother had no difficulty in proving her case for contempt. 
• Pointing out that the father was earning R147,000 p.m. (R83,000 net plus R10,000 to a provident fund), that he was paying R11,000 p.m. for a BMW and R14,000 p.m. on online gambling and trading, and commenting that “father’s position is extraordinarily brazen” the Court declared him to be in contempt of court. 
• To avoid 30 days behind bars he must pay off the arrears in instalments in addition to keeping up his monthly maintenance payments. He also has to pay all legal costs on the punitive “attorney and client” scale.

Second case: Sorry, dogs, it’s not quite the same for you

Although our courts naturally take a dim view of anyone disregarding any form of court order, jail time is not the only possible sanction. Thus, in another recent High Court case a fine (R20,000 conditionally suspended for three years) was imposed rather than a prison sentence.

• An acrimonious divorce action found a husband ordered to pay his wife on an interim basis for a variety of household expenses, including (the aspect that has captured most attention in the media) expenses relating to the couple’s two dogs for dog food, a dog walker, and veterinary, medical, and pharmaceutical expenses.
• The husband claimed a genuine misunderstanding of his obligations under the court order (not least regarding his various obligations vis-à-vis the dogs), a defence accepted by the Court in some regards but not in others.
• He also claimed inability to pay as a result of the lockdown’s effect on his company and his resultant reduction in salary – a defence rejected by the Court on the basis that he had “failed to put up evidence which should have been available to him to support a claim of unaffordability”. Similarly, his counter-application to reduce the amount of cash maintenance payable failed.

As to why the defaulter in this case avoided a prison sentence (as requested by his wife) the Court concluded that “imprisonment is not called for. I am dealing with a first infraction, which is considerably narrower than what the wife alleged.” One wonders whether another factor in that outcome might have been the fact that no children were involved, just a wife seemingly “unattractively intent on extracting more than her ‘pound of flesh’” and two pampered pooches. Certainly, the wife’s failures led the Court to award the wife only 75% of her costs, and on the ordinary cost scale rather than on a punitive scale.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“Zooming Into the Future: Tips to Improve One’s Appearance at Online Meetings” on Law.com is a useful compilation of advice on the best –

• Lighting 
• Background 
• Eye level
• Appearance (did you know about the “Touch Up My Appearance” button?
• Sound. 

It’s written specifically for lawyers doing their lawyerly things and for witnesses giving evidence online but is a great resource for anyone and everyone using virtual meetings of any sort.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“Death knocks at all doors alike” (John Dunton 1692)

Sooner or later we must leave our families to face life without us, and of course these are particularly dangerous times for us all. 

Make sure that your own affairs are in order now – 

1. A valid will is the only sure way to protect your loved ones after you are gone. 
2. If you have an old will, check whether it needs updating or changing.
3. Leave a file with all the important information and documents that your estate’s executor will need. 

Five mistakes which can invalidate your will 

The last thing you want is to leave your loved ones grappling not only with the tragedy and grief of your passing, but also with a bitter feud over the validity of your will. Avoid these mistakes in particular –

1. Not complying with all the required formalities when making your will: Although our courts do have a discretion to order the Master of the High Court to accept as valid any document not complying strictly with the various required formalities (the court must be satisfied that the document “was intended to be [your] will or an amendment of [your] will” you will want to spare your loved ones all the delay, cost and risk of dispute involved in a court application. 
2. Not complying with formalities when changing your will: The same applies if you want to change or revoke your will. In addition, a court can declare your will to be fully or partially revoked if you did anything (such as leaving something written on your will, an action on your part, or another document) that satisfies the court of your intention to revoke the will. Again a scenario to avoid at all costs with a properly-drawn replacement will or codicil.
3. Leaving any doubt as to your “testamentary capacity”: Anyone aged sixteen years or more may make a will “unless at the time of making the will he is mentally incapable of appreciating the nature and effect of his act”. Although it is up to anyone challenging your capacity to prove that you were mentally incapable at the time, there are grey areas here and our law reports are full of bitterly-fought disputes over the question of testamentary capacity. So if there is any chance at all of that sort of challenge arising ask your lawyer to advise on the best way to leave proof of your capacity at the time of signing.
4. Leaving any doubt as to fraud or forgery: All too often our courts have had to decide disputes over whether the signature on a will is genuine or forged, or over allegations of fraud. Again if there is any risk of that happening, get legal advice on how to put the genuineness of your signature, and of the correctness of your will, beyond doubt.
5. Leaving any doubt as to coercion or “undue influence”: As with the previous two warnings, this isn’t likely to be a danger for most people, but on the “better safe than sorry” principle don’t risk any chance of someone challenging your will with accusations that you were subjected to some form of duress (threats perhaps, anything that would cause you to act unwillingly or against your better judgment) or undue influence.

If you don’t have an updated will in place contact your attorney now – one of the commonest (and most tragic) mistakes people make is thinking “I’m too busy right now, it can wait”. It can’t!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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“Only in our dreams are we free. The rest of the time we need wages” (Terry Pratchett)

The flood of lockdown lay-offs and salary reductions has left many tenants struggling to find rent money, and their landlords wondering how to cover their bond repayments and other expenses.

Whether you are a landlord or a tenant (note that we are talking here only about residential leases) you need to be aware of the new Alert Level 1 Regulations applicable to evictions “for the duration of the national state of disaster”. 

In a nutshell (this is of necessity only a brief summary of some highlights from the full regulations so take professional advice specific to your circumstances) –

• Evictions can take place but only with a court order.
• Courts have the power to suspend eviction orders until after the “lapse or termination of the national state of disaster”. Expect courts generally to lean towards suspending eviction orders; in other words landlords will in all probability have their work cut out for them.
• Landlords will in practice have to convince the court that it would be “not just or equitable” to suspend the order, taking into account a whole range of listed factors such as health considerations (public health as well as that of the parties), the tenant’s ability to immediately access another residence and basic services, the impact of the disaster on both parties (with the court balancing the prejudice to each of them from delaying eviction) and whether the landlord “has taken reasonable steps in good faith, to make alternative arrangements with all affected persons, including but not limited to payment arrangements that would preclude the need for any relocation during the national state of disaster”. 
• The Rental Housing Tribunal has new powers to urgently restore occupation and/or services to tenants deprived of either by the landlord. This would be by way of an “ex parte spoliation order”, i.e. without the landlord having any right to be heard, although the landlord can ask for an urgent hearing on 24 hours’ notice.
• “Unfair practice” is presumed where –
  • Services are terminated without reasonable notice, alternative payment arrangements have unreasonably not been made, or where “no provision has been made for the ongoing provision of basic services during the national state of disaster”’
  • Any penalty for late payment of rental (where the default is caused by the disaster) has been levied (only interest can be charged), 
  • Either the landlord or the tenant have failed “to engage reasonably and in good faith to make arrangements to cater for the exigencies of the disaster”,
  • “Any other conduct prejudicing the ongoing occupancy of a place of residence, prejudicing the health of any person or prejudicing the ability of any person to comply with the applicable restrictions on movement that is unreasonable or oppressive having regard to the prevailing circumstances.”

Notes for landlords and tenants

Keep a full record of everything in case your dispute ends up before the courts or the tribunal.

Both landlords and tenants will have to act fairly and reasonably towards each other here, taking into account your respective abilities to comply with the terms of the lease during the state of disaster. 

Where tenants are struggling to pay rent as a result of the lockdown, landlords should be open (to whatever extent possible) to any reasonable request for rental deferments or reductions. Tenants in turn should be fair and reasonable in asking for relief. Good faith negotiation is key if landlords can expect to have any chance of obtaining an immediately-enforceable eviction order.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

The sharp upsurge in businesses operating remotely as a result of the pandemic lockdowns means a lot more people working from home – most presumably in low-profile home offices, but inevitably some in the form of full-on business activities from home. What effect is that having on the property market?

Work-from-home and what’s hot in property market trends 

Let’s firstly have a look at what trends are emerging in the “hot property” market, driven by both the work-from-home phenomenon and by the general economic fallout from the pandemic and the lockdowns –

• Increased interest in coastal and country properties from employees and businesses looking to work remotely away from congested highways and crowded cities.
• Upsizing by stay-at-home workers looking for extra home office space and facilities.
• Downsizing by financially-stretched homeowners reducing costs and looking to realise the value in large houses they no longer need (either by selling or by renting out).
• Increased demand for rental properties in some sectors, driven presumably by owners selling homes to cut costs, perhaps also by sales in anticipation of emigration or semi-gration.

The law

The next question of course, regardless of whether you are selling, buying or staying put, is this – what does the law have to say about home businesses? As a small business are you clear to move your business into your house? As an employee is there anything in the law to stop you from setting up a home office? As a neighbour do you have any right to object?

Those are of course important questions to ask before you buy a “home-office-house” and before you open up a home business in your existing house. The last thing you want is to be shut down by unhappy neighbours or the local municipality.

The two questions to ask

The High Court has confirmed that there are essentially two questions to ask –

1. Is the activity in question allowed by local zoning and land use laws?
2. Is there any other legal block in place, for example are there any title deed restrictions or, if the residence is part of a community scheme like a Home Owners Association (HOA) or a Sectional Title complex, do the complex’s rules allow it?

Living in a complex – the hair salon allowed by zoning laws but closed down by the HOA

• A homeowner had for many years run a hair salon business from her home in a complex, although both the HOA’s constitution and its conduct rules allowed only residential usage of houses except with authorisation via a special resolution. She was bound by the constitution and rules both by the terms of her purchase agreement and by her title deeds.
• When she refused to cease business the HOA approached the High Court for an interdict. Her central argument was that her home business was permitted by the local zoning regulations in terms of which certain small scale non-residential activities were allowed in the area.  
• Not relevant, held the Court in interdicting the homeowner from continuing her business.  She had agreed to a limitation of her rights, she had agreed to forfeit her right to use their land for anything but residential purposes and the HOA had not purported to change the zoning scheme and was “well within its rights to seek to preserve the residential character of the development”.

In other words, HOA and Body Corporate rules can in principle be more restrictive than local zoning laws and effectively override them in such a case. Bear in mind that each case will be decided on its facts, and in addition there has been some speculation recently that the National State of Disaster regulations and orders could be used to justify a departure from that principle. Much safer however to assume that you are bound by your complex’s rules (which may in any event allow you to work from home and/or to run a small business, although perhaps only with consent).

Must you apply for rezoning or municipal consent? 3 categories to consider

If you don’t live in a residential complex or if you do but are in compliance with the complex’s rules, you need to check that you aren’t going to be stopped from operating (perhaps even fined) by your local authority. 

Your local municipality will have its own land use and zoning regulations and bye-laws, but generally speaking your business activities will fall into one of three categories –

1. Micro business: Depending on the zoning of your particular area, working alone from home in a home office is highly unlikely to cause any issues either legally or practically, and you are also likely to be allowed to conduct small scale business activities from home without consent where your business activities fall into your municipality’s “micro-business” or “home enterprise/undertaking” category (check with your local municipality on its rules in this regard).
2. Municipal consent: As soon however as your activities go further (there are normally limits on things like the nature of the business, number of staff, percentage area of the house used for the business, parking availability, noise/nuisance factors and the like) you will probably have to apply for municipal consent or a permit to operate.
3. Rezoning: In other cases you may need to go further and apply for complete rezoning of the property, possibly also for removal of title deed restrictions.

Take specific advice in any doubt!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“Neither a borrower nor a lender be” (Shakespeare)

This is a case of a “love relationship” gone wrong but the principles of vehicle ownership apply to any situation in which you lend a motor vehicle to anyone else.

A widely-held misconception is that if you are the registered owner of a car, it is yours and you are the owner. Not so, as a recent High Court judgment aptly illustrates –

The registered owner unable to reclaim “her” car 

• In what must at the time have seemed like a straightforward agreement between two people “in a love relationship”, a woman agreed to lend her lover a vehicle which she bought from a finance company under a loan agreement.
• They had agreed verbally that he could use the vehicle for his personal use and would repay her for loan instalments, insurance, licencing, servicing, traffic fines and the like.
• When the relationship soured, the woman asked the Court for an order returning the vehicle to her as owner. 
• Although there was no dispute that she was indeed registered as owner of the vehicle, the Court dismissed her application on the basis that, whilst possession of a vehicle’s registration papers is prima facie (“at first view”) proof of ownership, it is never conclusive proof of ownership. Nor is any change of ownership required to be registered for transfer to take place. So in this case the registration papers did not prove ownership, the actual owner being the finance company.
• This is different to the position with land, where registration of ownership in the Deeds Office proves ownership and is necessary for transfer of ownership. That no doubt is the origin of the myth that being registered as the owner of a car proves that you are the owner – an incorrect and dangerous assumption.
• The woman was accordingly not the owner of the vehicle, rather the finance house was the owner in terms of the lease agreement which provided that it retained ownership until all amounts due under the agreement had been paid in full.
• End result – the ex-lover keeps the car, for now at least.

Lessons for lending out cars…

• Should you decide to lend out your car, make sure to do it under a written agreement – the parties in this case were lucky that they could agree on the terms of their verbal agreement as our law reports are replete with bitter and expensive litigation over what everyone said and who agreed to what verbally.
• Include a term spelling out clearly your rights to recover possession of the vehicle. The woman in this case would have been in a far stronger position if the parties had agreed that, even if the man held up his end of the bargain to pay for all the loan instalments and other expenses, the woman still retained the right to reclaim the vehicle if their relationship ended (she still wouldn’t have sued as owner, just to enforce the agreement). 
• For life partners and cohabiting couples this is yet another reminder that there is no such thing as a “common law marriage” in our law. There are no automatic marital or other rights attaching to your relationship and applicable when the relationship ends, so entering into a full cohabitation agreement is the only way to safeguard both your and your partner’s financial and personal rights.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

(Note: If none of this applies to you please think of passing it on to anyone you know who may find it useful)

In these hard times it is not always easy to keep up bond repayments, particularly if you are one of the many victims of the lockdown that have lost your job or your business.

The worst thing you can do is ignore the problem – that is a recipe for the bank taking legal action against you and ultimately repossessing your home. For some practical advice on what to do (and what not to do) if you are unlucky enough to fall into arrears with your bond, read “Home Repossession: Holding On To Your House In A Time Of COVID-19” on iAfrica.com. For many people their house is their most important asset so seeking professional help in need is a real no-brainer here!

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

© LawDotNews

“… in certain circumstances the principal may be liable to pay commission to both agents where it is impossible to distinguish between the efforts of one agent and another in terms of causality or degrees of causation.” (Extract from judgment below)

With many property sellers allowing multiple estate agencies to market their properties in their attempts to sell during what is still (for the moment at least) a buyer’s market, now is perhaps a good time to remind both sellers and buyers of the double commission danger. 

Consider this scenario – you mandate an agent who introduces a potential buyer to your property, but no acceptable offer results. Later on you bring another agent in, and this time the same buyer makes an acceptable offer. Which agent must you pay commission to – the agent who originally introduced the buyer to the property, or the agent who eventually closed the deal?

In a nutshell, an agent must be the “effective cause” of the sale to be entitled to commission and our law reports are replete with disputes between sellers and agents over who is and who isn’t the effective cause of a particular sale. As the High Court put it a few years ago: “Our Courts have repeatedly acknowledged how difficult it is, when there are competing estate agents, to determine who the effective cause of the sale that eventuates is.”

The big danger for the seller of course is being held liable to pay full commission to two estate agents. The factual disputes that arose in the High Court case in question illustrate…

R1.6m commission claimed

• A property seller engaged agency A to sell the property, and later signed a sole and exclusive mandate with agency B to sell the property by auction. 
• One (unsuccessful) auction later, and after much negotiation and to-ing and fro-ing, the first agency (A) presented an offer from buyer C which the seller accepted.
• Agency B claimed to have been the effective cause of the sale to C and sued the seller for R1.6m in auctioneer’s commission. The seller, at risk of paying (substantial) double commission, resisted vigorously.
• Most of the relevant facts were in dispute, with A and B presenting the Court with substantially different versions of events in virtually every important respect. B’s application was dismissed by the Court on the ground that because of the critical disputes of fact it should have proceeded by way of “action” not “application” – a technical distinction of great interest to the legal fraternity but not relevant here.
• What is highly relevant to sellers, buyers and agents is the ease with which the seller’s decision to engage the services of two agencies led to such bitter disputes of fact and law. 

Sellers, Buyers and Agents: How to protect yourself

Sellers: As always, agree to nothing without legal advice, and insist on formal agency mandates. If you give mandates to multiple agencies, ask them each for a list of the prospective buyers they have introduced, and insist on the buyer indemnifying you against multiple commission claims (necessary because you might not know if your buyer has dealt with more than one agency). You may be advised in some cases to have the various agents give you a similar indemnity.

Buyers: Again, agree to nothing without advice! When viewing a property tell the agent if you have viewed it before with another agent and in particular if the offer/sale agreement you are asked to sign contains any warranties/indemnities, make sure it is safe to agree to them. 

Agents: Don’t put your hard-earned commission at risk – avoid uncertainty and dispute with clear, properly-drawn mandates. Comply also with the EAAB’s Code of Conduct’s requirements on exposing a client to the risk of double commission.

Disclaimer: The information provided herein should not be used or relied on as professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your professional adviser for specific and detailed advice.

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