HOLDING YOURSELF OUT AS AN ESTATE AGENT AND THE DEFINITION OF ESTATE AGENT UNDER THE ESTATE AGENCY AFFAIRS ACT (“EAAA”)
“Estate Agent” is defined under the EAAA as “any person who for the acquisition of gain on his own account or in partnership, in any manner holds himself out as a person who, or directly or indirectly advertises that he, on the instructions of or on behalf of any other person (i) sells or purchases or publicly exhibits for sale immovable property… or (ii) lets or hires or publicly exhibits for hire immovable property…”.
This definition was interpreted by the Appellate Division in the matter of Rogut v Rogut . In this case the Respondent averred (and the Appellant denied) that he was authorised by the Appellant during 1977 to find a buyer for the Shoprite Group at a commission of 10% of the sale price. The Respondent indeed found and introduced a buyer who purchased the shares from the Appellant. The Respondent claimed the commission from the Appellant, averring that he was the effective cause of the sale.
The Appellant raised the defence, amongst others, that the Respondent was precluded from claiming commission due to the fact that he was not in possession of a valid fidelity fund certificate at the time the mandate was entered into and was therefore in breach of section 27 of the EAAA No 112 of 1976. In terms of this Act, no person shall perform any act “as an estate agent” unless a valid fidelity fund certificate has been issued to him or her.
The court noted that the key indicators in the definition of estate agent are “holds out” or “advertises”. These ”activities” must precede the instruction (mandate). In other words, a person who does not hold himself out as an estate agent or who does not directly or indirectly advertise that he performs estate agency services, is not an estate agent. The court came to the conclusion based on the facts of this particular case that the Respondent at no stage held himself out or advertised that he was an estate agent, within the meaning of the definition in section 1. Hence he did not become an estate agent as defined: he did not perform any act as an estate agent and was not required to have a fidelity fund certificate.
What is the philosophy underlying this interpretation? As stated in subsequent judgments supporting this interpretation, is the following: “What the Act does is to clip the wings of those who for gain hold themselves out as sellers of immovable property, etc, or advertise that they are such persons. They must apply for fidelity fund certificates and comply with the requirements of the Act, including trust funds and audits. The Act does not express an intention to apply to the case of a member of the public who has neither held himself out nor advertised as aforesaid and who accepts a mandate offered by a friend to find a buyer, etc on a commission basis. One does not impair the freedom of the individual unless compelled by law to do so. If it is contended that the Act contains a clear implication to curb such freedom, I would say that an implication cannot be clear if it has to be astutely winkled from contextual crevices.”