Effective Cause – “Causa Causans”

It is notoriously difficult, when there are competing estate agents, to determine who is the effective cause of the sale that eventuates.

This article looks at the decision of the Supreme Court of Appeal (“SCA”) in Wakefields Real Estate (Pty) Ltd v Atree and others 2011 JOL 27977 SCA to establish whether an estate agent who introduces a purchaser to a property, where a sale is concluded through another agent, is the effective cause of the sale and entitled to commission.

The facts are briefly as follows:

In 2004 the Attrees advised an estate agent employed by Wakefields that they were possibly selling their property. Although unsure if they were definitely going to sell, the Attrees invited agents to bring potential purchasers to view the property. The agent employed by Wakefields listed the property on its books and advertised it.

In early 2005 another agent employed by Wakefields took prospective purchasers to view the property. One such potential purchaser who was taken to view the property by this agent was Ms Howard. Ms Howard however informed this agent that although she “loved” the property she could not afford it. It must be stressed that the price appeared to be the only obstacle preventing Ms Howard from purchasing the property.

Shortly thereafter, whilst at a shopping centre, Ms Howard incidentally encountered an estate agent employed by another agency – Pam Golding. Ms Howard mentioned the Attree’s property to this new agent and stated that she liked the property but it was too expensive.

In April 2005 the Attrees lowered the price of the property and gave another agency – Remax – a sole mandate to sell it.

Despite the sole mandate Mr Attree advised the Pam Golding agent that the price had been lowered. The Pam Golding agent remembering the encounter with Ms Howard informed her that the price had been lowered. Ms Howard then made an offer to purchase the property which was accepted. Remax and Pam Golding shared the commission.

The question which arouse was whether Wakefields was the effective cause and entitled to commission.

The Kwa-Zulu Natal High Court dismissed Wakefields’ claim and held that Wakefields had not been given a mandate and were not the effective cause of the sale. Nicholson J held that the initial introduction by Wakefields was outweighed by intervening factors namely: When Wakefields introduced Ms Howard to the property she could not afford it, the Remax agent persuaded the Attrees to reduce the price, and the Pam Golding agent did more than Wakefields to secure the sale and without her efforts the sale would not have eventuated.

The SCA overturned the High Court’s decision and found that Wakefields was the effective cause of sale in introducing Ms Howard to the property and but for Wakefields’ conduct Ms Howard would not have been aware of the property. The Pam Golding agent had rather fortuitously learned that Ms Howard was interested in the property. Had Ms Howard not been introduced to the property by Wakefields she would never have mentioned it to the Pam Golding agent. The SCA therefore found that despite the Pam Golding agent’s later intervention Wakefields was the effective cause and entitled to commission. Interestingly, the SCA ordered the Attrees to be liable for commission payable to Wakefields in full, and to Remax and Pam Golding in equal shares, as a result of their own conduct.

This article is a general information sheet and should not be used or relied on as legal or other 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 legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE).