No FFC no commission not always the case

No FFC no commission not always the case

MAIN IMAGE: Romy Tarboton, principal Signature Real Estate; Johan Muller, director Snyman De Jager.

Estate agents are now entitled to commission if they are forced to trade without a valid Fidelity Fund Certificate (FFC) due to negligence or reluctance to comply on the side of the Estate Agency Affairs Board (EAAB) rules Supreme Court of Appeal.

It is eighteen months and an estimated R400 000 in legal fees later but the tenacity of Signature Real Estate and their legal team has paid off. The Supreme Court of Appeal in Bloemfontein on 10 June 2020 upheld their appeal against the previous so-called ‘No FFC no commission’ ruling of the Cape Town High Court.

The Cape Town High Court ruled in December 2018 that an agent or agency is not entitled to claim commission if they are not in possession of a valid FFC on the date and time when the transaction was concluded and commission was deemed to be earned.

Also read: High court rules no FFC no commission

The said court case followed after another estate agency, Atlantic Seaboard Realty, had refused to pay Signature its 50% commission share from a lease agreement jointly facilitated by both agencies. Atlantic argued that Signature was not entitled to said commission since the latter was not in possession of a valid FFC at the time of the conclusion of the agreement.

Background: In January 2017 Hidicol CC, which has traded as Signature Real Estate CC, was converted into a company and they informed the EAAB of this conversion. Signature argued in court that it had complied with all the Board’s requirements in relation to changes in entities and that they had requested amended FFC’s to be issued to its directors and its agents. However, the EAAB had erroneously issued certificates in the name of Hidicol CC instead of Signature on 1 January 2018. After the Board was made aware of these errors, they reissued the certificates to Signature on 8 May 2018 and later replaced them with backdated certificates, dated 1 January 2018.

Judge Diane Davis in the aforementioned High Court ruling, however, ruled that the backdated FFC was not in compliance with Section 34 of the Estate Agency Affairs Act (EAAA), requiring that the agent had to be in possession of a valid FFC when the commission is earned. Signature was granted leave to appeal by Judge Davis and in November 2019 a crowdfunding campaign was launched to raise funds to cover legal costs.

Also read: ’No FFC no commission’ to be resolved by Supreme Court

Now the battle fought has been won. The Supreme Court of Appeal found in favour of Signature’s appeal in a unanimous decision by the presiding judges.

“We are naturally thrilled,” says principal Romy Tarboton. The Court of Appeal also ordered Atlantic Seaboard Realty to pay Signature its share of the commission together with interest and costs.

What does the ruling mean?

As mentioned, Judge Davis ruled that a backdated FFC did not meet the requirements of said legislation. However, during the appeal Signature stated that it had complied with all the formalities and was entitled in terms of the provision of the Act to be issued with the proper certificates in its converted name. Johan Muller, director of legal firm Snyman De Jager, explains as follows the function of the Estate Agency Affairs Act and the legal implications of the ruling by the Supreme Court of Appeal:

The function of Section 26 and 34A of the EAAA is not only to ensure that the estate agents have met the requirements of the Act to practice as such, but also that the estate agents can demonstrate proof to any interested party of compliance with the requirements of the Act. Part of the function of a FFC is to serve as public proof of an estate agent’s status.

In the judgement of the appeal it was found that the purpose of the Act was served and that the public would have been protected, if for example a member of the public had suffered loss due to misappropriation by an estate agent involved in the agreement in question, the Board, would have been hard-pressed to argue that a claim against the Fidelity Fund should not succeed because a certificate had not physically been issued to the wrong-doer at the time of the conclusion of the agreement and that such an outcome would be contrary to the purpose of the legislation.

Based on the aforementioned the Court of Appeal found that Judge Davis and the Court a quo (legal term meaning the court in which the matter was first heard) should have found in Signature’s favor and the appeal therefore must succeed.

In conclusion, although the EAAA has clear directives with regards to FFC’s and the provisions in terms of Section 26 and 34A are preemptory, it is now apparent that once proven that an agent that complied with all the formalities to be issued with a proper FFC and the Board being negligent or reluctant to comply, will entitle such agent to claim commission irrespective of the absence of such correct certificate.

Showing 26 comments
  • Serame
    Reply

    Justice on platter..well done!

  • ADRIAAN
    Reply

    Congratulations! Well done!

  • DEAN THURLEY
    Reply

    How will this ruling apply to the provisions of the new Property Practitioners bill?

    In this case the dispute was between the 2 agencies, where the second one would end up paying costs and the EAAB, who is the actual party at fault, walks away without any costs order. As this resulted from the board not doing what it needs to, I feel that the costs order should have been paid by the board for both parties.

    • БАРУХ КЕРЕН
      Reply

      Absolutely agreed!!!
      EAAB are shocking and my FFC 2020 was issued only on 14 May 2020 despite I’ve paid EAAB fees in time in October 2019

  • lindsay daniel
    Reply

    further proof that the EAAB should be scrapped….

    • Jeanette Hall
      Reply

      I agree
      The EAAB should gave paid the costs.
      Once again they walk away Scot free.
      Their incompetence is mind boggling.
      Especially when an agent/agency has complied with all the requirements towards their FFC, and the board has not reacted. Forcing the agent into a vulnerable situation.

      • Victor
        Reply

        EAAB and their incompetence costing people a lot of money! Where is the justice in that?

    • БАРУХ КЕРЕН
      Reply

      Yes, Yes …. or major staff cleansing to be made

  • gavin hutchinson
    Reply

    This is a great victory for estate agents and now we don’t have to rely on the incompetence of the EAAB in the issuing of our FFC’s after we have paid and followed the correct procedures. The EAAB has been failing to issue legit FFC’s for many many years and caused so much grief and tears and even loss of earnings for legit estate agents trying to make a honest living. GREAT VICTORY and what a waste of money in legal fees that I am sure government will have to pay – persons responsible at the EAAB need to answer.

  • Robert v d Schyf
    Reply

    WELL DONE.

  • Elaine Lester
    Reply

    Well done! good to see that Justice prevailed!

  • Gail Trollip
    Reply

    Well done Romy you never gave up…..a victory indeed…..

  • Johan Scott
    Reply

    Well done to all concerned you did a great service to the industry as a whole. It is just a pity that the EAAB who are ultimately responsible for the fiasco isn’t penalized from their personal funds. Atlantic Seaboard Realty, who in my view, tried to unfairly take advantage of a fellow agent’s predicament will find they have lost credibility way beyond what they initially hoped to gain. Good luck with
    recovering from that.

  • Sonja
    Reply

    So many things that are wrong are starting to come out and be addressed. Citizens have to keep standing up for justice and the rule of law! It takes courage to pursue the principles of a matter and I salute you.

  • Jeanine Skelton
    Reply

    Well done, and thank you for your tenacity.

  • Johan Enslin Meyer
    Reply

    Great news for the Industry. Well done

  • Willie Pool
    Reply

    Well done.

  • Graham
    Reply

    I am and will always be of the opinion (and in favour of) that the EAAB should be decentralised and I also believe this will better serve both clients and Practitioners. The negativity surrounding the Eaab does reflect a negative with society in general. Despite the ruling, I don’t believe anyone should be allowed to trade without the necessary documentation. However , incumbents must present proof of compliance and perhaps a temporary dispensation can be considered.

  • Engela Vlok
    Reply

    Thank you so much as the EAAB is still not sufficient. They blame everything on the virus but they where useless before the virus. NO feedback on any emails. A list was send to us from EAAB of staff members that will be working but needless to say not one of them answered a email up to date. They do not answer a phone. How can we as agents work without a board that do not support you? They just ignore all inquiries. I have send all my queries to all the departments and no one bother to respond. This is a big concern. Agents been blocked and we want to know why fees are paid. What is the path forward with this board that do not support us in any way? What is their obligation towards us at this stage … nothing

  • Andrew sadomba
    Reply

    The EAAB had erroneously issued certificates in the name of Hidicol CC instead of Signature on 1 January 2018

    This will stop the other agency from stealing from others even though with FFC. Although Signature had an FFC which had a wrong name, Atlantic Seaboard refused to give them their share of commission. Atlantic should have only queried the authenticity of the FFC and paid the commission.

    Yes the EAAB should not have issued the FFC with a wrong name but we all know how they do their things and we should not take advantage and kill others.

  • Nafeesa Vallie
    Reply

    A huge accomplishment Romy!

  • Manuella
    Reply

    Well done. Agree EAAB need to pull up their socks. I wrote my PDE4 last year and is still waiting for my agent status to be updated. Received 2020 FFC still showing intern. After numerous emails and phone calls still no luck.

  • Vida
    Reply

    EAAB has not been responding to any of my emails either in the past two years. I have been calling their offices every month about issuing the latest FFC and I have paid all the fees & sent them all documents requested but no response? I even sent them proof of payments, but they don’t even acknowledge receipts of any payments? Every time someone answers the phone they say they will escalate the matter and will let me know but you never hear from them? This is not acceptable! What can we do?

  • Fatima
    Reply

    CONGRATULATIONS, WELL DONE!
    Tenacity brings results.

  • Charmaine Talbot
    Reply

    I paid for my FFC and followed all procedures and still have not been issued my FFC. No matter how many times I send through messages or phone.

  • Mona
    Reply

    this is a good day for the estate agents. We don’t all have money for legal fees and they know it, so we rather walk away and loose money.
    If you didnt do your part, I would say then it is no ffc, no commission but if you can show that you have an ongoing battle to get your things in order, you can ask for your commission.

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