Cape Town estate agent dupes seller in elaborate property scam, court intervenes

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What began as an ordinary sale in respect of a Cape Town property slowly revealed itself to be a sham: a mystery purchaser, hidden agreements, and an estate agent at the centre of this devious arrangement.

The deceptive sale agreement

Catherine Judy Brown inherited a residential property in Sea Point, Cape Town, from her deceased father. Jean Pierre Nortje, as Brown’s estate agent, was mandated to market the property on her behalf. There were two legitimate offers to purchase the property on 3 February 2020 and 24 February 2020, yet strangely, Nortje failed to present either offer to Brown.

Instead, he engineered an agreement of sale that placed Groundswell Developments Africa (Pty) Ltd (“Groundswell”), a company of which he was the sole shareholder and director, as the purchaser of the property. Nortje presented the contrived agreement of sale to Brown on 19 March 2020, and she signed it the following day – entirely unaware that the company offering to purchase her home was owned entirely by Nortje, her estate agent.

Two days before presenting the agreement of sale to Brown, Nortje (in his capacity as director of Groundswell) granted a letter of authority to one Crystalla du Plessis , an unknown party, whereby he bound himself to resign as the sole director of the company, caused all issued shares in Groundswell to be registered in her name on transfer of property, and authorised her to conclude property transactions on behalf of Groundswell.

The Supreme Court of Appeal (SCA) noted that the letter of authority prompted several concerns: it was strange that an unknown private individual would appear “from nowhere” and yet be authorised to bind the company without a resolution. The terms set out in the letter were also unusually favourable for du Plessis, as she would effectively become the owner of a company holding real estate without having paid a cent for it. It was the court’s further observation that the letter was a ruse, crafted specifically as a façade to acquire Brown’s property. And from here, the plot only thickened.

A secret agreement and the builder’s lien

On 25 March 2020, Groundswell and Horizon Group (Pty) Ltd (“Horizon”) concluded a renovation and repairs agreement, in terms whereof Horizon was to facilitate repairs, renovations and improvements to Brown’s property. Astonishingly, Horizon was also wholly owned by Nortje.

This agreement gave Horizon full possession of the property, barring Brown from interfering with the works in progress, and authorised renovations in the sum of R3.5m, an amount R500, 000 higher than the purchase price of the property in terms of the original agreement. Most significantly, this new agreement created a builder’s lien, allowing Nortje, or Horizon as it were, to retain possession of Brown’s property and use water, electricity and any other municipal services at her cost, until she paid the contract price of R3.5m.

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Shockingly, this agreement was never discussed with or disclosed to Brown, even though the original agreement did not authorise Groundswell to enter into any subsequent agreement with a “third party” – let alone at an amount far exceeding the property’s agreed purchase price. It is evident that Nortje’s scheme was structured to coerce Brown into paying to regain control of her property. As if that were not enough, Nortje started residing on the property and used it as his office, with Brown completely in the dark.

The cession attempt

On 13 June 2022, Brown’s attorney addressed a letter to Nortje formally cancelling the initial agreement of sale between herself and Groundswell, the power of attorney, and the estate mandate – citing Nortje’s misrepresentation as the reason. In response, on 18 July 2022, Nortje forwarded a document titled “notice of cession”, which stated that, as permitted under the original agreement of sale, du Plessis was ceding her and Groundswell’s rights and responsibilities to a “third party”: himself. Perhaps unsurprisingly, given the nature of Nortje’s conduct, the notice produced by Nortje was undated and only had his signature, where the purported cedent’s signature, being du Plessis, was “glaringly” absent.

It was only on 17 August 2022 that Brown became aware of the renovations and repairs agreement and ultimately got to know of Horizon’s existence and that it was completely owned by Nortje. The court stated that this purported cession “undoubtedly exposed” Nortje for what his true plans and intentions were. The circumstances also raised the question of howNortje could justify claiming an agent commission when his alter ego, Groundswell, was the purchaser in terms of the original agreement and when he thereafter became the purchaser in his personal capacity after the attempted cession.

The judgment of the High Court

It comes as little surprise that the high court found that Nortje had committed various acts of misrepresentation. More specifically, at the time the original agreement of sale was concluded in March 2020, Nortje was not in possession of a valid fidelity fund certificate and only obtained a valid certificate on 14 February 2021. In these circumstances, the court held that any mandate to Nortje during 2020 would have been invalid.

Further, the court found that Nortje having not disclosed his own interest in the transaction to Brown and consequently purchasing her property, while simultaneously acting as her agent, was unlawful. It is evident that Nortje was the true purchaser of the property and that he used Groundswell, with the assistance of “du Plessis”, as a front.

On this basis, the court declared the initial agreement of sale to be invalid and of no force and effect. The court also found that at the time the application was brought, Nortje was residing on the property and using it as an office without Brown’s knowledge and consent, “authorised” in terms of clause 7 of the agreement of sale, in terms whereof Groundswell was entitled to “beneficial vacant possession”. However, even if the agreement of sale were not rendered invalid, nothing in clause 7 permitted Nortje to occupy the property for residential or work purposes.

On these grounds, the court found his occupation of the property to be unlawful. The court concluded that Nortje’s use of Horizon constituted an abuse of juristic personality of the company as a separate entity and therefore deemed Nortje and Horizon to be the same person as contemplated in section 20(9)(a) and (b) of the Companies Act.

This provision empowers courts to lift a company’s corporate veil in circumstances of unconscionable abuse. Given that Brown was never privy to the repairs and renovations agreement, the conclusion of the agreement was found to be an abuse. Considering that no actual proof of the amount and expenses in relation to the alleged repairs and renovations were provided, the high court declared the builder’s lien to be of no force and effect. In terms of the attempted cession, the court noted that a cession under clause 15.6 of the agreement of sale could only be effected to a third party. Seeing as Nortje was in fact an agent in terms of that agreement, he did not qualify as a “third party” as required, thus the court held that the cession was invalid and void from the offset.

As such, on 4 September 2023, the court granted an order, inter alia, declaring that the agreement of sale between Brown and Groundswell was invalid and of no force and effect, declaring that the builder’s lien relied on by Horizon was void and of no legal force and ordering that Nortje, or Groundswell and Horizon as it were, grant vacant possession of the property to Brown within 30 calendar days. Nortje’s application for leave to appeal was dismissed on the grounds that there was no reasonable prospect of success on appeal and that there was no other compelling reason why an appeal should be heard. On 11 July 2024, a subsequent petition for special leave to appeal suffered the same fate, hence, a reconsideration application in terms of section 17(2)(f) of the Superior Courts Act was referred to the SCA.

Reconsideration application to the SCA

A reconsideration application to the SCA is a mechanism reserved for exceptional circumstances. In Liesching and Others v S and Another, the Constitutional Court held that a reconsideration application applies once special leave has been refused, implying that the applicant must demonstrate something beyond the requirements for special leave, and establish that a grave failure of justice would result, or the administration of justice would be brought into disrepute should a matter’s outcome not be reconsidered.

\Further judgments emphasise that reconsideration applications “is not intended to afford disappointed litigants a further attempt to procure relief that has already been refused” and that “an application that merely rehearses the arguments that have already been made, considered and rejected will not succeed”. Regarding Nortje’s reconsideration application, the SCA, evidently astonished, observed that calling Nortje’s actions “a shenanigan” would be an understatement. Thus, the SCA upheld the high court’s rulings, found that Nortje had hopelessly failed to satisfy the requirements and dismissed the reconsideration application with costs on a punitive scale.

Restore integrity

This judgment is a stark reminder that undisclosed interests and self-dealing do not survive judicial scrutiny, and that juristic personalities offer no refuge when used to mislead clients. Where conduct undermines trust in a transaction, courts will not hesitate to lift the corporate veil and restore integrity – and in circumstances where the veil is lifted, courts will unequivocally clarify that a reconsideration application to the SCA is reserved for true failures of justice, and not additional bites at the proverbial cherry.