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Court case: Paying a deposit on purchasing property

Agu v Krige and Others [2019] ZAWCHC 46

The applicant (A) approached the court for an order compelling the first respondent (K) to transfer a sectional title unit to her that she (A) purchased from him (K).

The facts, either undisputed or accepted by the court, were that A purchased the unit from K and financed the purchase through a mortgage bond which the third respondent (SHL) facilitated with the fourth respondent (BSI).  Both these respondents as well as the fifth respondent, the Registrar of Deeds (RD) played no part in the litigation.  The deed of sale required A to pay the full purchase price by a certain date to the second respondent (RS), an attorney and K’s choice to facilitate the transfer of the property.  A duly paid the amount into RS’s trust account, together with the amount earmarked for the transfer costs.  RS misappropriated the money.  When A demanded that transfer be effected, K denied liability and approached the Attorneys Fidelity Fund, which refused to entertain the claim as it was of the opinion that the person suffering the loss was A and not K.  On advice of her attorneys A persisted with her demand that K effect transfer of the property.  The court accepted A’s version that K in fact demanded that the services of RS be used to effect the transfer.

Counsel for A argued that RS was K’s agent for purposes of payment of the purchase price.  She (A) complied with all her obligations under the deed of sale when she paid the full purchase price plus costs to RS and is entitled to transfer of the property.  Counsel for K argued that RS was just as much A’s agent than his, as RS would be holding A’s funds until date of transfer of the property and would be liable to pay any interest earned between date of payment and date of transfer over to A.

The court (Francis AJ) held that on the facts it was clear that RS was K’s agent for purposes of effecting the transfer and receiving the purchase price. This is based on a proper interpretation of the deed of sale.  After paying the purchase price and costs over to RS, A could do nothing more and had in fact complied with all her obligations under the deed of sale.  The fact that A would be entitled to the interest on the amount paid over until date of transfer is nothing more than accepting a commercial reality that interest would be earned and that K would only become entitled to the purchase price upon transfer.

The application succeeded.

Comment:  Executors and trustees are sometimes required to effect property transactions, either as purchaser or seller.  Great care should be taken to know and understand the contents of the deed of sale in question, also with regard to when obligations under the contract will be deemed to be complied with.

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