IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT. CAPE TOWN)
Case No: 26681/2009
in the matter between
DG PREMIER PROPERTY CAPE (PTY) LTD

and

Instructed by:				 Bowman Gilffilan Attorneys

Counsel for First Respondent:      	O Rogers SC (with him A Kantor) 

No appearance for the Second Respondent

Court: Western Cape High Court 
Judge:Griesel J 
Heard: 13 October2010 
Judgment     27 October 2010

				

IN THE HIGH COURT OF SOUTH AFRICA 
(WESTERN CAPE HIGH COURT, CAPE TOWN)

Case No 26681/09

In the matter between:

DC PREMIER PROPERTY CAPE,

and

CHESTNUT HILL INVESTMKNTS 2611

GREAT FORCE INVESTMENTS 205

JUDGMENT

GRIESEL J:

[3] In its founding papers the applicant's main cause of action against the first respondent (the seller) was based on an alleged oral mandate. It relied, in the alternative, on the terms of an addendum to the deed of sale concluded between the first and second respondents on 6 August 2009. (The claim against the second respondent - the purchaser has been settled after these proceedings had been instituted and its position is not relevant for purposes of tills judgment.)

[51 The applicant contended that these provisions constituted an agreement tor its benefit (stipulatio alteri), the benefits of which it had accepted. In its founding affidavit, the applicant referred to the above provisions and stated: 'To the extent necessary, applicant has accepted alternatively hereby accepts the benefits under the written sale agreement.'

In its answering affidavit the first respondent denied that the applicant had accepted the benefits flowing to it in terms of this agreement'. It continued: 'However, if it did so (which I deny), then it is only entitled to commission "upon registration of transfer". 'Transfer has not yet taken place," Elsewhere, the first respondent denied, without elucidation, 'that it was open for applicant lo accept those benefits in its founding affidavit.. .' It contended, further, that if the applicant did accept the benefits under the sole agreement (which it again denied), "then applicant repudiated same by seeking to claim commission prior to the transfer of erf 319 Clifton to second respondent".

[6] In reply, the applicant reiterated that il had accepted the benefits flowing to it in terms of the agreement and would have done so far sooner, had the first respondent not refused to provide the applicant with a copy of the agreement when called upon to do so. (Ms Dogon stated on behalf of the applicant that she saw the addendum for the firsl lime when it was annexed to the second respondent's answering papers in these proceedings.)

[7] In argument before me, counsel for die firs! respondent did not persist with any of the 'defences' raised in the answering affidavit to this part of the applicant's claim. Instead, counsel submitted that the provisions of clause 4.1 do hot constitute an agreement for the benefit of the  applicant, as contemplated by our law. Counsel relied in this context especially on the following dictum from the judgment of Smalberger JA in Total South Africa (Pty) Ltd vBekker NO:

"As was pointed out by Schreiner JA in Crookes NO and Another v Watson and Others 1956 (1) SA 277 (A) at 291B-C, "a contract for the benefit of a third person is not simply a contract, designed to benefit a third person; it is a contract between two persons that is designed lo enable a third person to come in as a party to a contract with one of the other two". The mere conferring of a benefit is therefore not enough; what is required is an intention on the part of the parties to a contract that a third person can, by adopting the benefit, become a party to the contract.''

[8] As always, however, each case must be decided on its own facts: or, as it was put in George. Ruggier & Co v Brook:

'It is entirely a question whether there is an intention that the third party can, by adoption of the promise, become a party to the contract, in which it is embodied.'

[9] in the Total case, supra, the agreement in question was held not to constitute a stipulatio alteri, inter alia, because there was no express wording to such effect, nor was there any provision for acceptance by the third party of any benefit thereunder. Furthermore, the terms of the agreement did not support a "necessary implication' to that effect. In any event, so it was held, there was no evidence dial the third party had ever accepted the benefit at a time when it was open for him to do so.

[10] in the George Ruggier case, supra, the purchaser of fixed property addressed a letter to the agents of the seller, who were acting on the latter's behalf, in which the purchaser offered to buy the property at a stated figure and to pay half the agent's commission. The seller accepted the offer. The agent subsequently sued the purchaser directly, based on the undertaking. The court found -

"that it was intended by all concerned that this undertaking of the defendant could be adopted by the plaintiff so as to give him a right of action against the defendant in the event of the sale going through on the terms proposed [by the purchaser]'.

A direct contract between the agent and the purchaser came into being upon acceptance by the agent of the benefit.

[11] In the present matter, counsel for the respondent argued that the provisions of clause 4, quoted above, 'constituted merely a distribution of the risk of commission between [the first and the second respondents] and had nothing lo do with conferring any benefits on the applicant". I disagree. From the express terms of the agreement it is clear to me that the agreement was intended lo be one for the benefit of the applicant where it records in peremptory terms that each of the seller and the purchaser "shall pay' to die applicant commission in the specified sum of Rl million, (It is common cause that the second respondent had in fact reached agreement with the applicant that its portion of the commission would be reduced 10 R500 000 and that this amount had been paid by the second respondent.) The sole purpose of the addendum, signed on the same day as the main deed of sale, was to regulate the question of commission payable to the applicant and the respective contributions by the buyer and seller. In this regard, it is noteworthy that, in concluding the addendum, the first and second respondents actually agreed to share the liability for commission on almost identical terms as was originally proposed by the first respondent in the first draft of the deed of sale, forwarded to the applicant during April 2009 for submission to the second respondent.

[12]    Counsel for the first respondent also submitted that-

'there is in- circumstance which is absolutely destructive of an implication in the applicant's favour: on the applicant's own version, the terms of the sale were deliberately concealed from it. If the intention of the  respondents on 6 August 2009 had been that the provisions regarding commission were for the applicant's benefit, and if their intention had been that the applicant could acquire rights thereunder by accepting the benefit, they would not  have kept the agreement from Dogon.'

[13] Counsel for the applicant pointed out, on the other hand, that this argument would have carried greater weight had the first respondent at all times been bona fide in its dealings with the applicant which, according to the applicant, was not the case. In my view, this argument is not without merit. However, it is not necessary for me to make a specific finding to this effect. Suffice it for purposes hereof to state that the first respondent has not persuaded me that the inference it seeks to draw from the first respondent's withholding from the applicant of the signed agreement is in fact the most probable one.

[14] Further support tor the applicant's interpretation of clause 4.1 is to be found in the affidavits of both respondents herein. In its answering affidavit the second respondent on at least five occasions — expressly referred lo clause 4.1 as a 'stipulatio alteri'. In an aborted application for leave to file a further affidavit, the first respondent's attorney of record, likewise, repeatedly referred to clause 4.1 as a 'stipulatio alteri'. Thus, where both parties to the addendum at one stage recognised the provisions of clause 4 for what they are. it would, in my view, be 'absurd' now to attribute to the clause a different interpretation, as contended for by the first respondent.

[15] Had the applicant elected to reject the benefit stipulated in terms of the addendum, it could of course (if so advised) have proceeded against the first respondent for the full amount of the claim in terms of the oral mandate on which it also relied. However, it elected to accept the benefit stipulated between the buyer and seller and I can think of no reason why such election should not be enforced.

Conclusion

[16] It follows that the applicant is entitled to an order in the following terms:

first respondent is ordered to pay to the applicant -

(a)	the amount of Rl million (one million Rand);

(b)	interest on the said amount a tempore morae to date of payment; and

(c)	costs of suit, including the costs of two counsel.

						B M GRIESEL
 						Judge of the High Court