Brief Summary

Execution — Sale in execution — Rescission of order — Application for rescission of an order cancelling a sale in execution granted in chambers — Rule 42(1)(a) permits rescission of a judgment erroneously sought or granted in the absence of any party affected — Applicant indicated opposition prior to the order being granted, which was not considered by the judge — Order granted in chambers was erroneous from a procedural standpoint, entitling the applicant to rescission.

Comprehensive Summary

Summary of Judgment

Introduction

The proceedings were an application for rescission of an order granted in chambers under Rule 46(11), which had cancelled a sale in execution. The rescission application was determined by the Gauteng Division of the High Court, Johannesburg, per Wentzel AJ, with judgment delivered on 15 July 2015.

The applicants were Montjane Trevor and Aachem Homes Services CC. The respondent was the Sheriff of the High Court, Johannesburg South. The judgment also recorded the matter as arising “in re” execution proceedings in which Changing Tides 17 (Pty) Ltd N.O was the execution creditor, and Segole Thabo Jacob and Segole Lydia Lettie were the execution debtors.

The procedural history was central to the dispute. A sale in execution took place on 10 September 2013. After the purchaser allegedly failed to comply with obligations under the conditions of sale, the Sheriff proceeded under Rule 46(11) and obtained an order in chambers from Windell J on 14 June 2014 cancelling the sale. The applicants later sought to have that chamber order rescinded, relying primarily on Rule 42(1)(a) (and, in the alternative, on principles associated with rescission of default judgments).

The general subject-matter concerned the operation of Rule 46(11) (cancellation and resale following purchaser default at a sale in execution), the procedural effect of an indication of opposition, and the circumstances in which an order granted in chambers may be rescinded where the court was unaware of opposition.

Material Facts

A sale in execution of immovable property occurred on 10 September 2013. The Sheriff later sought cancellation of that sale on the basis that the purchaser had failed to carry out obligations under the conditions of sale, which is the factual premise contemplated by Rule 46(11)(a).

It was common cause that the Sheriff’s cancellation process culminated in an order granted in chambers by Windell J on 14 June 2014, cancelling the sale in execution. It was also not in dispute that, had opposition been brought to the attention of the judge dealing with the matter, the chamber procedure would not have been appropriate and the matter would not have been disposed of summarily in chambers.

The case turned on the chronology and effect of steps taken by the applicants to indicate opposition before the chamber order was granted. The applicants initially attempted to oppose by filing papers on 26 February 2014 in the High Court in Pretoria (a step the court described as erroneous and not proper notice to the Johannesburg court). Nonetheless, those papers were received by the Sheriff’s attorney on 28 February 2014, and the Sheriff’s attorney acknowledged receipt and treated them as an indication of opposition, while also pointing out perceived deficiencies in what had been filed.

Further correspondence followed. The Sheriff’s attorneys warned that the cancellation application had already been lodged and would be considered in chambers, and they advised that if the applicants wanted their documents before the judge in chambers, the applicants had to ensure those papers reached the judge.

On 27 March 2014, the applicants filed a notice of opposition with the Registrar of the Johannesburg High Court. This occurred well before the chamber order of 14 June 2014. It was accepted on the papers that the notice of opposition did not come to the attention of Windell J, because otherwise the order would not have been made in chambers.

A disputed factual aspect concerned whether the notice of opposition was properly filed, because it appeared to have been filed at the archives office rather than the main Registrar’s office. The respondent contended that this defective filing meant the applicants were the authors of their own misfortune and that the judge’s lack of awareness was not attributable to an error of the court administration. The applicants did not file a replying affidavit to address why the notice was filed in the archives, leaving the court without direct evidence explaining the filing choice.

Despite that, the court treated the existence of the notice of opposition, its service, and its filing at the archives office as common cause, and it noted the absence of evidence establishing what the proper filing procedure was in the circumstances. The court also considered it plausible (without definitive evidence) that the case file, being a 2008 case number, may have been archived, and therefore the filing at archives may not necessarily have been improper.

In addition, the applicants’ stance in the rescission proceedings included that they wished to obtain time to remedy their default under the conditions of sale, and the court regarded it as significant that the applicants did not meaningfully dispute that they had been in default when the cancellation order was sought.

Legal Issues

The court was required to determine, first, whether rescission relief was competent in respect of a chamber order cancelling a sale under Rule 46(11), in light of authority suggesting the procedure is sui generis and that a cancellation, once made, is irreversible if the purchaser did not intervene in time.

Second, the court had to decide whether the chamber order was “erroneously sought or granted” within the meaning of Rule 42(1)(a), given that a notice of opposition existed but did not come to the attention of the judge who granted the chamber order. This required analysis of whether the non-consideration of opposition was a procedural defect of the kind contemplated by Rule 42(1)(a), and whether the applicants’ filing steps constituted a sufficient “indication of opposition” to preclude a chambers determination.

Third, the court had to address the role of judicial discretion in rescission under Rule 42(1)(a), including whether (even if the order was erroneously granted) the court could and should refuse rescission in the absence of good cause, particularly where rescission would serve little purpose because default was admitted and the Sheriff would ultimately be entitled to cancellation.

Finally, the court considered an alternative route: whether rescission could have been available under Rule 31(2)(b) (rescission of a default judgment on good cause shown), and, if so, whether the applicants met the requirements of good cause.

These issues involved a mixture of law (the meaning and scope of Rules 46(11), 42(1)(a), and 31(2)(b), and the jurisprudence on rescission and finality), fact (what steps were taken to indicate opposition and whether filing at archives was procedurally adequate), and the application of legal standards to the facts (whether the undisclosed opposition rendered the chamber order “erroneously granted,” and whether discretion should nevertheless be exercised against rescission).

Court’s Reasoning

The court began with Rule 46(11)(a), emphasising that it provides a summary mechanism allowing cancellation of a sale by a judge in chambers on the Sheriff’s report, after due notice to the purchaser, where the purchaser fails to meet obligations under the conditions of sale. The court accepted that the procedure exists to provide judicial oversight of execution while achieving an expeditious and cost-effective process.

On the respondent’s preliminary objection that rescission was not competent, the court considered Standard Bank of South Africa Limited and Others v Ndlovu 2012 JOL 28652 (GSJ), where it was stated that a cancellation under Rule 46(11) is not a judgment in a conventional sense, is sui generis, and once granted cannot be undone if the purchaser did not intervene prior to cancellation. The court distinguished that authority on the basis that Ndlovu involved a situation where there had been no indication of opposition prior to the judge considering the cancellation in chambers, whereas in the present matter there was such an indication before the chamber order was made.

The court relied on the principle articulated in Sheriff, Hlabisa and Nongomo v Shobede 2009 (6) SA 272 (KZP) that an indication of opposition is sufficient to prevent the granting of an order in chambers under Rule 46(11) and to require the dispute to be ventilated in open court. The court also referred to Sheriff of the High Court v Sithole and Three Similar Cases 2013 (3) SA 168 (GSJ) for the constitutional and practical rationale for Rule 46(11): it facilitates swift realisation without compromising notice and the audi alteram partem rule, protects the interests of creditors and debtors, and prevents purchasers from delaying realisation and increasing costs and interest.

Turning to Rule 42(1)(a), the court adopted the established approach that an order is “erroneously granted” when the court was unaware of facts which, if known, would have procedurally precluded making the order. The court cited authority to the effect that Rule 42 is restrictively construed and addresses procedural irregularities rather than all mistakes, with reference to decisions including Promedia Drukkers & Uitgewers (Edms) Bpk v Kaimowitz 1996 (4) SA 411 (C), National Pride Trading 452 (Pty) Ltd v Media 24 Ltd 2010 (6) SA 587 (ECP), Van der Merwe v Firstrand Bank Ltd t/a Wesbank and Barloworld Equipment Finance 2012 (1) SA 480 (ECG), and Colyn v Tiger Food Industries Ltd [2003] 2 All SA 113 (SCA); 2003 (6) SA 1 (SCA), as well as the common-law context emphasising certainty and finality of judgments.

The court held that if the notice of opposition had come to Windell J’s attention, the chamber order would not have been granted; accordingly, the order was procedurally erroneous within the meaning of Rule 42(1)(a), at least on a prima facie basis. The court recognised that Rule 46(11) does not expressly prescribe how opposition must be indicated, and it considered the absence of a prescribed procedure relevant. The court reasoned that, at minimum, a formal notice of opposition filed with the Registrar and served on the Sheriff would ordinarily be appropriate, although it noted uncertainty as to whether a supporting affidavit was necessary at that early stage.

A substantial part of the reasoning dealt with whether the applicants’ filing at the archives office meant the order was not “erroneously granted” because the failure to draw opposition to the judge’s attention was the applicants’ fault. The court declined to conclude this on the record, stressing that there was no evidence establishing the filing procedure beyond argument from the bar, and that the applicants’ inability to identify which judge would hear the matter made filing with the Registrar the practical method of indicating opposition. The court also considered that, given the age of the case number and archiving practices, it could not find that filing at archives was necessarily improper on the facts presented.

The court then addressed, as a matter of principle, whether an order granted under Rule 46(11) in chambers is capable of rescission where opposition was timeously indicated but not considered due to administrative inefficiency. The court rejected the proposition (advanced by reference to Ndlovu) that the purchaser’s only remedy would be delictual damages and that rescission is not available. It considered that such a position would undermine the purchaser’s right to a hearing in open court once opposition is indicated and would be inconsistent with the judicial oversight function, particularly where forfeiture of a deposit may be in issue. The court distinguished Rule 46(11) chamber orders from administrative “judgments” arising from certified statements filed under section 91(1)(b) of the Income Tax Act, which were discussed with reference to Capstone 556 (Pty) Ltd v Commissioner, South African Revenue Services and Another [2011] ZAWCHC 297 (22 June 2011) and Modibane v Commissioner, South African Revenue Service [2011] ZAGPJHC 152 (20 October 2011).

Having found that rescission was competent in principle under Rule 42(1)(a), the court turned to whether rescission should be granted as a matter of discretion. Although the court accepted that rescission under Rule 42 is not expressly conditioned on showing a substantive defence in the same way as Rule 31 default rescission, it held that the court retains an inherent discretion to refuse rescission even where the applicant falls within the literal requirements of the Rule, drawing on the approach in Colyn v Tiger Food Industries Ltd [2003] 2 All SA 113 (SCA); 2003 (6) SA 1 (SCA).

The court then considered the alternative position under Rule 31(2)(b), explaining that good cause requires (among other things) a reasonable explanation for the default, a bona fide prima facie defence, and that the application is not brought merely to delay. Applying these considerations, the court concluded that good cause was not established. The court stressed the absence of an adequate explanation (especially given the lack of a replying affidavit), the absence of a defence existing at the time of the cancellation (an offer to perform later was not a defence), and the applicants’ own version suggesting the rescission application was pursued to obtain time to remedy the breach.

The court further reasoned that rescission would serve little practical purpose because the applicants admitted default, and even in open court the Sheriff would be entitled to cancellation if breach was established. The court also took account of the applicants’ procedural conduct in the rescission proceedings (including the absence of a replying affidavit, and failures in prosecuting the application), which reinforced the view that the rescission application was not bona fide pursued and was aimed at delay.

In balancing these considerations, the court held that, although the chamber order was erroneously granted and rescission was competent under Rule 42(1)(a), the court would nevertheless exercise its discretion against rescission because of the absence of good cause and because rescission would not advance justice on the facts as presented.

Outcome and Relief

The application for rescission was dismissed.

No rescission of the chamber order cancelling the sale in execution was granted, notwithstanding the court’s conclusion that rescission was competent and that the order was erroneously granted within the meaning of Rule 42(1)(a).

As to costs, the court ordered that each party bear their own costs, reasoning that the applicants were reasonably entitled to bring the rescission application in light of the procedural error, despite criticism of the applicants’ attorneys’ tardiness and lack of diligence.

Cases Cited

Standard Bank of South Africa Limited and Others v Ndlovu 2012 JOL 28652 (GSJ).

Sheriff, Hlabisa and Nongomo v Shobede 2009 (6) SA 272 (KZP).

Sheriff of the High Court v Sithole and Three Similar Cases 2013 (3) SA 168 (GSJ).

Promedia Drukkers & Uitgewers (Edms) Bpk v Kaimowitz 1996 (4) SA 411 (C).

National Pride Trading 452 (Pty) Ltd v Media 24 Ltd 2010 (6) SA 587 (ECP).

Van der Merwe v Firstrand Bank Ltd t/a Wesbank and Barloworld Equipment Finance 2012 (1) SA 480 (ECG).

Colyn v Tiger Food Industries Ltd [2003] 2 All SA 113 (SCA); 2003 (6) SA 1 (SCA).

De Wet and Others v Western Bank Ltd 1979 (2) SA 1031 (A).

Plascon-Evans Paints Ltd v Van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; 1984 (3) SA 623 (AD).

Moodley v Reddy 1985 (1) SA 76 (D).

Weave v Absa Bank Ltd 1997 (2) SA 212 (E).

Capstone 556 (Pty) Ltd v Commissioner, South African Revenue Services and Another [2011] ZAWCHC 297 (22 June 2011).

Modibane v Commissioner, South African Revenue Service [2011] ZAGPJHC 152 (20 October 2011).

Mokoena v Commissioner for South African Revenue Service 2011 (2) SA 556 (GSJ).

Singh v Commissioner South African Revenue Service 2003 (4) SA 520 (SCA).

Commissioner, South African Revenue Service v Hawker Air Services (Pty) Ltd [2006] ZASCA 51; 2006 (4) SA 292 (SCA).

Metcash Trading Ltd v Commissioner, South African Revenue Service and Another 2001 (1) SA 1109 (CC).

Subramanian v Standard Bank Ltd [2013] JOL 30321 (KZP).

Ferris v FirstRand Bank Ltd 2014 (3) BCLR 321 (CC); 2014 (3) SA 39 (CC); [2013] ZACC 46.

Trapel Farms CC and Others v Rodel Financial Services (Pty) Ltd [2013] JOL 29822 (KZP).

Wright v Westelike Provinsie Kelders Bpk 2001 (4) SA 1165 (C).

Swadif (Pty) Ltd v Dyke 1978 (1) SA 928 (A).

Saphala v Nedcor Bank Ltd 1999 (2) SA 76 (W).

Lazarus v Nedcor Bank Ltd 1999 (2) SA 782 (W).

Swart v Absa Bank Ltd 2009 (5) SA 219 (C).

Vilvanathan v Louw NO [2011] 2 All SA 331; 2010 (5) SA 17 (WCC).

Nedbank Ltd v Soneman and Another 2013 (3) SA 526 (ECP).

Wahl v Prinswil Beleggings (Edms) Bpk 1984 (1) SA 457 (T).

Riddles v Standard Bank South Africa [2009] 2 All SA 407 (T).

Legislation Cited

Income Tax Act, section 91(1)(b).

Promotion of Access to Justice Act, 2000 (PAJA).

The Constitution of the Republic of South Africa (as referenced generally in relation to audi alteram partem).

Rules of Court Cited

Uniform Rule 46(11)(a).

Uniform Rule 42(1)(a).

Uniform Rule 31(2)(b).

Uniform Rule 6.

Uniform Rule 31(5).

Rule 35(5)(b) (as referenced in the judgment).

Held

The court held that an order cancelling a sale in execution under Rule 46(11), granted in chambers, was capable of rescission under Rule 42(1)(a) where a notice of opposition had been filed timeously but did not come to the attention of the judge, such that the order was erroneously granted from a procedural perspective.

The court nevertheless held that rescission does not follow automatically and that the court retains a discretion to refuse rescission even where Rule 42(1)(a) is satisfied. On the facts, the court held that good cause was not established, that the applicants lacked a defence existing at the time of cancellation (an offer to perform later being insufficient), and that the rescission application appeared directed at delay.

The rescission application was dismissed, with an order that each party pay its own costs.

LEGAL PRINCIPLES

An order made under Rule 46(11) is intended as an expeditious mechanism to enable a Sheriff to cancel and resell property where the purchaser defaults under the conditions of sale, while maintaining judicial oversight of the execution process.

An indication of opposition to a Rule 46(11) cancellation is sufficient to preclude the matter being dealt with summarily in chambers and requires that the dispute be ventilated through ordinary court processes in open court.

Under Rule 42(1)(a), a judgment is “erroneously granted” where the court was unaware of facts which, if known, would have procedurally precluded the granting of the order. Rule 42 is confined to procedural mistakes and does not extend to all forms of error.

Even where the requirements of Rule 42(1)(a) are met, rescission is discretionary and may be refused where justice and the common-law interest in the finality and certainty of judgments so requires.

Where rescission is sought on the basis of default under Rule 31(2)(b) (and similarly under common-law principles), an applicant must show good cause, including a reasonable explanation for the default, a bona fide prima facie defence existing at the time, and that the application is not brought merely to delay. An attempt to cure a breach after the right to cancel has arisen does not, without more, constitute a defence for rescission purposes.

Montjane and Another v Sherif of the High Court Johannesburg South; In re: Changing Tides 17 (Pty) Ltd N.O and Others (31494/08) [2015] ZAGPJHC 171 (15 July 2015)