K Seven Investments CC v Anchorprops 162 (Pty) Ltd and Others

The plaintiff, K Seven Investments CC, submitted a tender proposal to a government department for the lease of commercial properties, including a property owned by the first defendant, Anchorprops 162 (Pty) Ltd. The plaintiff did this initially without the first defendant's knowledge. After the tender closed, the plaintiff contacted the first defendant's director (third defendant), leading to negotiations and the conclusion of a written fee agreement stating that if the lease was awarded, the plaintiff would be the 'effective cause' and entitled to a fee. A lease was subsequently signed between the government department and the first defendant, and the plaintiff was paid a portion of the fee. It later emerged that neither the plaintiff nor its sole member held a valid fidelity fund certificate at the time the services were rendered.

• Whether the plaintiff acted as an 'estate agent' as defined in the Estate Agency Affairs Act 112 of 1976.
• Whether the plaintiff was entitled to remuneration or payment under the fee agreement despite not holding a valid fidelity fund certificate at the time of performing the relevant acts.
• Whether section 34A(1) of the Estate Agency Affairs Act barred the plaintiff's claim for the balance of the fee.

The action was dismissed with costs, including costs of counsel on Scale C, on the party-and-party scale.

An estate agent (including a close corporation and its members) is not entitled to any remuneration or other payment arising from the performance of any act referred to in the definition of 'estate agent' in section 1(a) of the Estate Agency Affairs Act 112 of 1976, unless at the time of performing such act a valid fidelity fund certificate had been issued to that estate agent and, in the case of a close corporation, to every member of that corporation as contemplated in section 34A(1). This statutory bar operates by operation of law, regardless of any contractual agreement to the contrary.

The court noted that permitting the plaintiff to recover the fee despite non-compliance with the fidelity fund certificate requirement would make it a 'relatively simple exercise to circumvent the targeted legislation', which would be impermissible.

This case reaffirms the strict application of section 34A(1) of the Estate Agency Affairs Act, making clear that contractual fee agreements cannot override the statutory requirement that estate agents (including close corporations and their members) must hold valid fidelity fund certificates at the time of performing estate agency work to be entitled to remuneration. It confirms that the definition of 'estate agent' is interpreted broadly and objectively based on the nature of the acts performed.