What do you call practising attorneys trading as estate agents?

December 1st, 2017

By Maartens Heynike

The practice of attorneys trading as estate agents is nothing new. From times immemorial attorneys have, together with their other services, applied their skills and expertise in the estate agency industry (Incorporated Law Society of the Orange Free State v Kalil and Meltz 1951 (3) SA 645 (O) at 648 F).

On 1 August 1977, the Estate Agency Affairs Act 112 of 1976 (the Act) came into effect and regulated the estate agency industry in South Africa (SA) for the first time. Among its many provisions, the Act defined the meaning of an ‘estate agent’. Significantly and importantly, s 1(d) of the Act excludes an attorney from the provisions of the Act, provided they perform the functions of an estate agent:

‘[D]oes not include an attorney who, on his own account … in the course of and in the name of and from the premises of such attorney’s or professional company’s practice.’

What is significant about the above provisions is that the Act specifically requires that the attorney should perform the functions, ‘in the name of … such attorney’s or professional … practice…’, if the attorney wishes to enjoy the exemption under the Act.

This is significant because, prior to the Act (the Pre-Regulation Period), an attorney who acted as an estate agent was strictly required to do so in a different capacity than that of a professional or an attorney (Kalil and Meltz (op cit) at 650 H).

In the Pre-Regulation Period, a clear distinction was made between the non-legal and legal services of an attorney. An attorney could conduct two businesses (one legal and the other non-legal) from the same address and within their legal practice, provided a different trade name was used for the non-legal services (Kalil and Meltz (op cit) at 649 B-C and at 651 A-B).

When attorneys advertised their non-legal services they were restricted from adopting their practice names, legal practices and qualifications lest they became guilty of touting (Kalil and Meltz (op cit) at 647 G).

An important and critical question to ask is: Did the Act amended the common law concerning the duality of practice names for legal and non-legal work as explained above?

In other words, does the Act restrict an attorney, who carries out the business of an estate agent within their law practice, from doing so in a different name, other than the name of their law practice as was the case in the Pre-Regulation Period?

I submit that it does not. This submission is made on the following grounds:

  • The legislature did not intend the phrase ‘and in the name’ to mean the strict professional practice name (eo nomine) of the attorney.
  • The purpose of the Act was to exclude an attorney, who carries out the business of an estate agent, from the provisions of the Act, provided he does it in such a way that it is clear that it is performed –
  • by an attorney;
  • from their legal practice; and
  • in a name (not necessarily the attorney’s practice name) that clearly shows they are an attorney and not someone else.

In advocate CDA Loxton SC’s opinion (Chambers, Sandown, 24 January 2017), he states:

‘It is sufficient that the attorney in question uses his own name, or that of his partnership, or that of the professional company of which he is a member. The fact that in addition to using his own name or that of the firm or company he adds the logo and slogan … does not in any way detract from his compliance with the requirements of paragraph (d).’

He continues further and states: ‘In other words, paragraph (d) does not require that only the name of the attorney, firm or company be utilised in performing the acts listed in paragraph (a) of the definition of “estate agent” or that only such name be used in any advertising material. Had that been the intention of the legislature it would have been an easy matter to make such intention clear by use of words such as “exclusively” or “solely” in conjunction with the word “name”.’

Section 1(d) must be interpreted in such a way that:

  • The interpretation is in line with the existing law.
  • It does not amend the existing law more than what is necessary (LC Steyn Uitleg van Wette 3ed (Cape Town: Juta) at 96.
  • At least onerous as possible against the person to whom the Act applies (Steyn (op cit) at 103).

To interpret the relevant subsection in such a way that, when an attorney, who acts as an estate agent under their legal practice name, is excluded from the Act, but if they do so under a different name, they do not and would not be in line with the intention of the legislature (Advocate HH Steyn’s opinion (Maisels Chambers, Sandton, 3 November, 2006)).

It would also lead to the result that if an attorney uses their practice name, they would fall under the jurisdiction of their relevant provincial law society, but if they use, or only add, a different trade name to their practice name (to proclaim that they are an estate agent), they would fall under the jurisdiction of the Estate Agency Affairs Board.

To allow an attorney to trade as an estate agent outside the ambit of the Act, if they do so by trading strictly in their practice name, but to put them in a straitjacket when they add information to their practice name (to proclaim that they also act as an estate agent), would not pass the muster of the Constitution, nor was it the practice of attorneys, who carried on the business of estate agents in the Pre-Regulation Period.

The purpose of the legislature was to exclude an attorney from the Act, provided that, when they act as an estate agent, it would be clear that they are an attorney, that they do so from their existing practice, in the ordinary course of their business and not from a separate practice, address and bank accounts.

The phrase, ‘and in the name’ is capable of two meanings, namely, it could either mean –

  • the precise practice name of the estate agent attorney; or
  • a different trade name, provided it is clear that it is the name of the attorney.

For example, the practice name can be ‘ABC Attorneys’ and the trade name under which the attorney acts as agent attorney can be ‘ABC Attorneys trading as “Quick Sell Properties”’.

To conclude, the Act does not restrict an attorney, who practices as an estate agent, to do so under their practice name and an additional name and/or logo and/or slogan.

The next question is how does the Attorneys Act 53 of 1979 and the rules promulgated thereunder affect the above interpretation?

Section 23(1)(c) of the Attorneys’Act provides that:

‘(1) A company may, notwithstanding anything to the contrary contained in this Act, conduct a practice if –

(c) the name of the company, other than the expression “Incorporated” or “Inc.”, consists solely of the name or names of any of the present or past members of the company or of persons who conducted, either on their own account or in partnership, any practice which may reasonably be regarded as a predecessor of the practice of the company, unless the council of the law society having jurisdiction has approved any other name in writing in accordance with the rules of such law society: Provided that the words “and associates” or “and company” may be included in the name of the company.’

In his opinion, Loxton, SC (op cit) states: ‘In my view section 23(1)(c) deals only with the name which a professional company may adopt. It does not deal, either expressly or by necessary implication, with the manner in which a professional company may market itself or whether it may adopt a particular logo or slogan in its advertising material. Provided therefore that the name of the professional company complies … with the provisions of section 23(1)(c), the adoption by it of [a] … logo or slogan would not amount to an infringement of section 23(1)(c) of the Attorneys’ Act.’

The Rules of the Law Society of the Northern Provinces were replaced by the Rules for the Attorneys’ Profession (GenN2 GG39740/26-2-2016). The notice came into effect on 1 March 2016, from which date the rules applied.

Rule 46.3 provides:

‘A member shall practise only under a style or name which:

46.3.1 is his or her own name or the name of a former proprietor of, or partner in, such practice if he or she practises without partners; or

46.3.2 contains the names of any or all of the present partners or former partners or proprietors of or in such firm if he or she practises in partnership; or…’

I submit – and to find a meaningful interpretation for the above quoted sub-rule –  that the submissions as set out in paragraphs above, should apply mutatis mutandis to r 46.3.

If not, it would lead to untenable results:

  • It would mean that the sub-rule has amended the common law and/or the Act, which clearly cannot be the case.
  • It would also lead to the result that if an attorney trades as a sole proprietor or partnership, they may do so ‘… only under a style or name which: 46.31.1 is his or her own name or the name of a former proprietor of, or partner in, such practice if he or she practises without partner’, but, if the attorney practices in a personal liability company as required by the Companies Act 71 of 2008 (the 2008 Act), they are not bound by these restrictions (see r 46.4.2 below).

Rule 46.4.2 provides, however, that:

‘Notwithstanding the provisions of rule 46.1, it will be sufficient compliance with that rule:

46.4.2 in the case of a personal liability company, if the names of the directors are disclosed as required by the Companies Act 71 of 2008.’

I submit that compliance with r 46.4.2 constitutes due compliance with r 46.1.

Section 171(1) of the Companies Act 61 of 1973 (the 1973 Act) provides that:

‘A company shall not issue or send, irrespective of whether it is in electronic or any other format, to any other person in the Republic any trade catalogue, trade circular or business letter bearing the company’s name unless there is stated thereon or therein in a form capable of retrieving therefrom in respect of every director –

(a) his present forenames, or the initials thereof, and present surname;

(b) any former forenames and surnames not being those referred to in section 215(3);

(c) his nationality, if not South African.’

The provisions of s 171 of the 1973 Act, which dealt with the information to be contained in company communications were not re-enacted in the 2008 Act.

Section 24 of the 2008 Act prescribes the information to be included in company records. For directors, this must include their:

  • Full name and any former names.
  • Identity number or date of birth.
  • Nationality and/or passport number.

Except for advertisements about offers, the 2008 Act does not require the above information to be included in general advertising material. The mandatory information for a company letterhead is set out in s 32 of the 2008 Act. This section requires that company letters must include the name and registration number of the company.

‘It follows that provided that the names of the directors of a professional company are disclosed as required by the 2008 Act in the relevant documents, it is not necessary that the professional company practice under the name of a partner or former partner’ (Loxton, SC (op cit)).

To conclude, it suffices to the use of a logo and slogan in advertising material, letters and other communications by a professional company as these requirements will not contravene the provisions of either the Act or the Attorneys Act.

Maartens Heynike BCom LLB (Stell) LLM (UJ) is an attorney at Heynike Inc Attorneys in Johannesburg.

This article was first published in De Rebus in 2017 (Dec) DR 42.