THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

JUDGMENT

Reportable

CASE NO: 666/06

In the matter between :

JEAN JACQUES TALJAARD
Appellant

and

T L BOTHA PROPERTIES
Respondent

__________________________________________________________________________
Before:
CAMERON, NUGENT, CLOETE, PONNAN JJA & SNYDERS
AJA
Heard:
17 MARCH 2008
Delivered:
28 MARCH 2008
Summary:
Estate Agency Affairs Act 112 of 1976 – section 34A – estate agent
not entitled to remuneration if functions performed in absence of
fidelity fund certificate – client who pays remuneration in such
circumstances not entitled to claim its return.

Neutral citation:
Taljaard v Botha Properties (666/06) [2008] ZASCA 38 (28 March
2008)
__________________________________________________________________________

NUGENT JA

NUGENT JA:

[1] The respondent is an estate agent. In April 2004, in performance of a
mandate given to it by the appellant, the respondent brought about the sale by the
appellant of certain fixed property for the sum of R630 000.  It had been agreed
between the parties that in return for performing its mandate the respondent
would be paid R30 000 by the appellant and the sum was duly paid. At the time
the agreement of mandate was concluded (and the mandate was performed) –
unbeknown to the appellant at the time – a fidelity fund certificate had not been
issued to the respondent under the Estate Agency Affairs Act 112 of 1976.
Alleging that the agreement of mandate was for that reason invalid the
respondent claimed return of the remuneration. The claim failed in the
magistrates’ court, and failed again on appeal to the High Court at Cape Town
(Fourie J, with whom Traverso DJP concurred). This further appeal is before us
with the leave of this court.

[2] Although s 26 of the Act has been amended and substituted from time to
time the prohibition that is now material has remained unaltered.1 The section
prohibits any person from performing any act as an estate agent unless a fidelity
fund certificate has been issued to him or her. In 1985 the section as it then was –
which contained a prohibition in the same form – came under consideration in
Noragent (Edms) Bpk v De Wet.2 It was held in that case that the section did not
have the effect of invalidating the contract of mandate of an estate agent who
acts in contravention of its terms and that he or she was entitled to enforce a
contractual claim for commission.

1 The section was amended by s 3 of Act 10 of 1985, substituted by s 5 of Act 40 of 1986, and again substituted
by s 10 of Act 90 of 1998.
2 1985 (1) SA 267 (T).

[3] It was clearly in response to that decision that s 34A was inserted into the
Act the following year.3 In its initial form s 34A provided as follows:
‘Any person acting contrary to the provisions of section 26, shall not be entitled to
remuneration in respect of a transaction concluded by him as an estate agent while failing to
comply with the provisions of section 26.’
In 1998 the section was substituted4 and the material portion now reads as
follows:
‘(1)
No estate agent shall be entitled to any remuneration or other payment in respect of or
arising from the performance of any act [of an estate agent], unless at the time of the
performance of the act a valid fidelity fund certificate has been issued…to such estate
agent…’.

[4] It was submitted on behalf of the appellant that the effect of the section is
to invalidate the contract of mandate between the appellant and the respondent
(pursuant to which the respondent became entitled to its remuneration with the
result that the payment made by the appellant in ignorance of the invalidity of
the mandate is recoverable by the condictio ob turpem vel iniustam causam
(which allows for the recovery of money that has been paid in terms of an
unlawful agreement5).

[5] Section 34A does not in terms invalidate the contract of mandate of an
estate agent who acts in conflict with s 26.  Bearing in mind that the section was
introduced in response to the judgment in Noragent – which had held that a
contravention of s 26 of the Act did not invalidate the contract of mandate – it is
inconceivable that the section would not have provided expressly for invalidity if

3 The section was inserted by s 10 of Act 40 of 1986.
4 By s 18 of Act 90 of 1998.
5 The Law of South Africa ed WA Joubert 2 ed Vol 9 ‘Enrichment’ by JG Lotz (updated by FDJ Brand) para 214;
Wouter de Vos Verrykingsaanspreeklikheid in die Suid-Afrikaanse Reg 3ed pp. 161-171.

that had been the intention with which the section was introduced. I think it is
clear – as the court below found – that the validity of a contract of mandate is
unaffected by an act of the estate agent in breach of s 26. In those circumstances
the payment that was made in this case was made pursuant to a valid contract
and is not recoverable by the condictio.

[6] It was also submitted on behalf of the appellant that s 34A itself implicitly
confers a right of action upon the appellant to recover remuneration that has been
paid contrary to its provisions. It was submitted that by disentitling an estate
agent from remuneration the section not only disentitles him or her from
claiming the remuneration but also disentitles him or her from retaining
remuneration that has been paid. The implication, so it was argued, is that a right
of action is conferred by the section for its return. For it would be anomalous, so
it was argued, if an estate agent were to be precluded from claiming
remuneration but permitted to retain remuneration that has been paid.

[7] It seems to me that that misconstrues the purpose of the section. It was not
enacted for the benefit of clients who have incurred a contractual obligation to
pay remuneration to an estate agent who has performed his or her mandate – I
have already held that the contract giving rise to the obligation remains valid
notwithstanding the breach of s 26 – but rather to penalize estate agents who
have breached the section. An estate agent who claims remuneration in conflict
with s 34A might expose himself or herself to criminal sanction,6 and will be
prevented from enforcing his or her claim, but I do not think it follows by
necessary implication that a client who has settled his or her contractual
obligation is accorded a right of action for its return.

6 Section 34 provides that ‘any person who contravenes or fails to comply with any provision of this Act’ shall be
guilty of an offence.

[8] It is well-established that legislation is to be construed so as to interfere as
little as possible with established rights.7 While it might indeed seem anomalous
that an estate agent is prohibited from enforcing a claim for remuneration that
has become due, but may retain that remuneration if it has been paid, that
apparent anomaly arises as no more than an incident of the purpose of the
section. Had it been intended to confer a right of action upon a client for
recovery of moneys that became contractually due it would have been a simple
matter to do so in express terms. Absent the express conferral of a right of action
I do not think it is conferred by necessary implication.

[9] The appeal is dismissed with costs.

____________________
R.W. NUGENT
JUDGE OF APPEAL

CONCUR:
CAMERON JA)
CLOETE JA)
PONNAN JA)
SNYDERS AJA)

7 Steyn Die Uitleg van Wette 5ed p. 97.

THE SUPREME COURT OF APPEAL
REPUBLIC OF SOUTH AFRICA

MEDIA SUMMARY – JUDGMENT DELIVERED IN THE SUPREME COURT OF APPEAL

From:
The Registrar, Supreme Court of Appeal
Date:
28 March 2008
Status:
Immediate

J J TALJAARD v T L BOTHA PROPERTIES

Please note that the media summary is intended for the benefit of the media and
does not form part of the judgment of the Supreme Court of Appeal.

* * *
The Supreme Court of Appeal (SCA) today (28 March 2008) held that an estate
agent who has received remuneration for performing his or her mandate, but was
not in possession of a fidelity fund certificate at the time, is not obliged to return
the remuneration to the client.

Section 34A of the Estate Agents Affairs Act 112 of 1976 provides that ‘no estate
agent shall be entitled to any remuneration or other payment in respect of or
arising from the performance of any act [of an estate agent] unless at the time of
the performance of the act a valid fidelity fund certificate has been issued to …
such estate agent’

In the present case the estate agent fully performed his mandate and received the
agreed commission from his client.  The client then sued the estate agent for return
of the commission, relying on the terms of s 34A. The claim was dismissed in the
magistrates’ court, and again on appeal to the High court at Cape Town.
Dismissing a further appeal the SCA held that section 34A was not enacted for the
benefit of clients who have paid remuneration that became contractually due to an
estate agent, but rather to penalize estate agents who act without fidelity
certificates.  That it created an apparent anomaly – that an agent may not claim his
or her commission, but may retain the commission if it has been paid – was
incidental to the purpose for which the section was enacted.