Levitt charged commission for no sale – claim
THIRTEEN years ago Zimbabwean pensioner Lin Mehmel was forced to sell her Franschhoek fruit farm when her business ran into financial difficulties.
Her erstwhile foreign business partner, who left the country soon afterwards, recommended that she deal with a liquidator by the name of Bernard Gutman, who in turn recommended that she auction the farm through Auction Alliance – and he brought Rael Levitt to her farm to view it.
Mehmel did not want to see the property go under the hammer, knowing that auctions typically fetch a lower price than what she might get through a real estate agent, or privately.
But Gutman and Levitt insisted, and gave her four weeks to find a buyer or they would auction it off.
While she was securing a buyer, AA and Gutman began to advertise the auction.
“They cut a corner and went ahead without the necessary authority in law to do so,” says Julian Murdoch, a Durbanbased attorney employed by Mehmel to act for her in the winding up of her business and the disposal of her farm.
“Levitt came and erected one of those big billboards at the entrance to the far m,” Mehmel remembers. “And I took it down and told him there would be no auction.”
Meanwhile, Mehmel found one potential buyer but lost him when he learnt the farm was being advertised for auction. A second buyer eventually came forward and Mehmel forced Gutman to conclude a sale with him, though at a lower price than the first buyer had offered.
Although it was a private sale, Levitt said he had incurred advertising costs of R59 188.63 and demanded that he be refunded, as well as R566 580 commission, although he had not auctioned the property. Mehmel said he had no right to such costs, but Gutman disagreed.
“Now remember, I was an old woman,” says Mehmel, 75. “I was vulnerable. I was going through tough financial times. I bowed to their pressure.”
But in 2008 a Cape Town lawyer contacted Mehmel to tell her Gutman was being investigated, and that he had evidence of wrongdoing during her 1999 sale.
Gutman had been sequestrated by then and it transpired that Levitt had paid what is alleged to be a kickback to Gutman from the commission. The “kickback” was paid into the trust account of a law firm that Auction Alliance regularly employs (known to Saturday Star).
Mehmel launched proceedings in the Western Cape High Court. Her claim was speedily settled by AA.
“I am prevented from disclosing the terms of the settlement,” says Mehmel, “as Auction Alliance and Levitt required me to agree to keep confidential the terms.”
Had she not been alerted to Gutman’s wrongdoing, she would be no better off now. “Even though we were awarded a settlement, I still lost. I lost the first buyer, who was willing to pay a higher price. I lost what was deducted by Levitt, and even though I received a settlement all these years later, I ended up getting much less than was actually taken at that time as I had to pay legal fees.”