WHO IS THE EFFECTIVE CAUSE?

The question often gets asked as to which agent is the effective cause with respect to a transaction where agent no 1 introduces a purchaser to a property, does all the work and the purchaser purchases the property through agent no 2, only because the second agent reduces their commission.

The courts have described the effective cause in a number of ways, these being the following:
1. Whether the agent was ‘the decisive factor’ of the transaction;
2. Whether the agent was the ‘causa causans’ (major cause) of the sale;
3. Whether or not eh estate agent’s effort ‘rendered the one ready for selling and the other right for buying at an agreed price;
4. Whether the estate agent’s introduction of the purchases remained “overridingly operative”;
5. Whether the agent’s actions ‘have been sufficiently important in achieving a result for the accomplishment of which the principal had promised to pay him, so that it is just that the principal should pay the promised compensation to him”;
6. ‘Where the first agent has introduced a purchaser to a property and a second agent has persuaded the Purchaser to purchase the property, the effective cause will depend on whether the first agent’s introduction still operated to influence the purchaser to buy and upon the significance or importance of the part played by the second agent, in a casual sense, in relation to the conclusion of the contract’.

It would further appear that it is the importance of the estate agents efforts that must be considered, not the amount of effort.

The agent will be the effective cause of the sale if they can show that it is through their efforts, which resulted in the sale being concluded, notwithstanding other factors which also played a role such as the intervention of other estate agents.

There could be said to be a two fold enquiry, namely:
1. That factor(s) must be identified which played a role in bringing about the transaction in question. It is those factors that can then be said to have ‘caused’ the transaction, without necessarily being the effective cause thereof.
2. Secondly it must be determined which factor(s) or efforts, independently or taken together, played the most significant role in bringing about the transaction. Those factor(s) and/or efforts would then constitute the effective cause of the transaction.
In a court decision (Grobbelaar and Winterhoek Estates), the High Court, on appeal, held that by agent no 2 reducing their commission, they were the effective cause of the sale and agent no 1 was not entitled to commission, although agent no 1 introduced the purchaser to the property.

One cannot accept this as correct, taking into account all the principles that have been applied by our courts, as the only role agent no 2 played in the above scenario was to reduce their commission while agent no 1 had incurred all the marketing costs, introduced the purchasers, persuaded the purchaser that this was the property for him and obtained a full offer for the property. The only factor preventing agent no 1 from earning commission was the fact that he did not reduce his commission.

In conclusion it can be said that the effective cause of the sale will depend on all the factors. The High Court has decided that agent no 2 is the effective cause by reducing their commission, this can only be changed if taken to higher court which may find differently on the facts.