Nach Investments (Proprietary) Limited v Knight Frank South Africa (Pty) Ltd

The appellant owned immovable property in Germiston which was leased to a tenant holding a contractual right of pre-emption. The appellant appointed the respondent estate agent under an exclusive mandate, later tacitly continued on a non-exclusive basis, to sell the property. The respondent was aware of the tenant’s right of pre-emption. The respondent procured a willing and able third-party purchaser and submitted a written offer acceptable to the appellant. In compliance with the lease, the appellant presented the offer to the tenant, who exercised its right of pre-emption and purchased the property on the same terms. The appellant refused to pay commission, contending that the respondent was not entitled to commission because the property was sold to the tenant rather than to a purchaser introduced by the respondent.

The appeal was dismissed with costs, and the respondent estate agent’s entitlement to commission was confirmed.

The case authoritatively confirms that estate agents’ commission claims in South African law are governed by ordinary principles of contract, not special or implied legal rules. It clarifies that an agent may earn commission even where the property is sold to a person not introduced by the agent, including a tenant exercising a right of pre-emption, provided the agent was the effective cause of the sale. The judgment is frequently cited on the concept of ‘effective cause’ in agency and commission disputes.