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[2020] ZAGPJHC 416
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The Sheriff of the High Court, Pretoria East and Others v Dos Reis and Others (2017/12536) [2020] ZAGPJHC 416 (4 December 2020)
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REPUBLIC
OF SOUTH AFRICA
IN
THE HIGH COURT OF SOUTH AFRICA
GAUTENG
LOCAL DIVISION, JOHANNESBURG
CASE
NO: 2017/12536
REPORTABLE:
YES / NO
OF
INTEREST TO OTHER JUDGES: YES/NO
REVISED
In
the matter between:
THE
SHERIFF OF THE HIGH COURT, PRETORIA EAST
First Applicant
ABSA
BANK
LTD
Second Applicant
STEPHANUS
ANTONIE JACOBUS NAUDE
Third Applicant
and
DOS
REIS, ORLANDO DE FARIA DA SILVA
First Applicant
DOS
REIS, VANESSSA REQUEL PINTO FAIA
Second Applicant
MOLKFI
PIET
NTLERU
First Intervening Party
LORRAINE
NTLERU
Second Intervening Party
(Plaintiff
a quo)
JUDGMENT
WINDELL,
J
INTRODUCTION
[1]
This matter came before me in the unopposed motion court on 2
November 2020. The third applicant, the first and second respondents,
as well as the intervening parties filed heads of argument, and the
application proceeded on an opposed basis. I reserved judgment
and
requested counsel for the second applicant (“Absa Bank”),
on 24 November 2020 to submit written heads of argument.
Despite
counsel’s undertaking to do so on 25 November 2020, I have to
date not received Absa Bank’s heads of argument.
On 4 December
2020, I granted an order in the following terms:
The intervention
application is granted and leave is granted to the first and second
intervening parties to be joined as the third
and fourth respondents
in the main application;
Upon
a reconsideration of the relevant factors in accordance with Rule
46(A)(9)(c), the sale whereby the third applicant, as the
highest
bidder, provisionally purchased from the First Applicant at a sale
in execution held on 28 January 2020, Portion [....],
being a
portion of Portion [....] of the Farm Rietfontein [....],
Registration Division J.R., Province of Gauteng situated at
[....]
Royal Chalice Crescent, Mooikloof Equestrian Estate, Mooikloof is
not confirmed.
The
second and third applicants are ordered to pay the costs of the
respondents, jointly and severally, the one paying the other
to be
absolved
,
including
the costs of counsel, on an opposed scale.
[2]
These are the reasons for the order.
[3]
On 11 April 2019, Sutherland J granted an order in the following
terms:
1.
The Sheriff of the above Honourable
Court is authorized to execute the Warrant of Attachment in terms of
which the immovable property
known as Portion 465, Portion of Portion
[....], of the Farm Rietfontein [....], Registration Division J.R.,
Province Gauteng measuring
1,0000 hectares, held by Deed of Transfer
No. T128005/2002 ("the property") may be sold in execution,
subject to a reserve
price of R9 800 000.00 ("the reserve
price");
2.
In the event that the reserve price
is not achieved at the sale in execution, then and in that event, the
Sheriff is authorized
to submit a report to this Honourable Court
within 5 days from the date of the sale in execution for an Order
that the property
be sold to the person who made the highest offer or
bid as provided;
3.
The first and second defendants
shall pay the costs of the application, jointly and severally, the
one paying the other to be absolved,
on the attorney and client
scale.
[4]
During April 2019, and at the time the order was made by Sutherland
J, the market value of the property was estimated at approximately
R16 000 000.00 and the municipal value of the property was estimated
at approximately R13 000 000.00. The outstanding rates and
taxes on
the property as at 17 January 2019 was R348 444.09, and the balance
due to Absa Bank, as at February 2017, was an amount
of R10 166
439.94.
[5]
It is common cause that the sale in execution occurred on 28 January
2020. The reserve price of R9 800 000.00 was not achieved.
The
highest bid that was obtained was R7 200 000.00, which was made by
the third applicant (“Mr Naude”). The bid was
provisionally accepted by the Sheriff subject to the court’s
confirmation.
[6]
Rule 46A(9)(d) of the Uniform Rules of Court provides that “
where
the reserve price is not achieved at a sale in execution, the sheriff
must submit a report to the court, within 5 days of
the date of the
auction.”
[7]
On 28 January 2020, the Sheriff compiled its report in terms of Rule
49A(9)(c). The Rule provides that the report must be submitted
to
court within 5 days of the auction. The consideration of the report
by the Sheriff is done in chambers and no formal application
is
necessary to be heard in open court. However, on 4 February 2020 the
Sheriff, Absa Bank and Mr Naude (the applicants) launched
a formal
application for an order in terms of Rule 46A(9)(c), namely that Mr
Naude be declared the purchaser of the immovable property,
being the
person who made the highest bid at the sale in execution that took
place on 28 January 2020.
[8]
The application in terms of Rule 46A(9)(c) was originally set down
for hearing on 23 April 2020. The respondents state that
they only
became aware of the application on 20 May 2020 when a copy of the set
down was emailed to them. A copy of the application
was, however,
only received on 19 June 2020. The respondents immediately filed an
intention to oppose the application and briefed
counsel to appear in
the matter on 22 June 2020. The matter was, however, not properly set
down and was not on the roll, and the
presiding judge was not willing
to entertain the matter.
[9]
On the same day, namely, 22 June 2020, the respondents’
attorney of record sent a letter to Absa Bank’s attorney
of
record (Jay Mothobi Incorporated Attorneys). It was specifically
recorded that the respondents would be seeking a postponement
of the
main application on 22 June 2020 because the property had been sold
to a certain Mr Molefi Piet Ntleru for the amount of
R10 300
000.00. The respondents aver that Mr Olivier from the firm Jay
Mothobi Incorporated replied by requesting information
relating to
the commission and the respondents’ attorney, at approximately
09h56, confirmed that a copy of the commission
addendum will be sent
as soon as it becomes available. The respondents further aver that Mr
Olivier stated that Absa Bank had to
understand what amount would be
available to be paid to it and further advised that the aspect of
levies, rates and taxes had to
be dealt with. At 15h33 on the same
day, the respondents’ attorney provided Mr Olivier with a
professional fee agreement.
It was specifically emphasized that the
matter was not adjudicated by the court and had to be set down again.
The respondents’
attorney specifically requested the copies of
all proceedings relating to the matter as well as substantiating
documents for amounts
outstanding. Mr Olivier tendered copies against
the reproduction costs.
[10]
On 25 June 2020, the respondents’ attorney again directed an
email to Mr Olivier. Mr Olivier was requested to provide
an estimate
to obtain copies of all the relevant pleadings. Mr Olivier was
further requested to provide calculations on all the
outstanding
amounts relating to the property and to confirm whether the
application would proceed, taking into account the offer
for
R10 300 000.00. On the same date, Mr Olivier replied,
indicating that Absa Bank Limited had no election whether the
application would proceed or not. Mr Olivier further indicated that:
1.
The amount outstanding relating to rates
and taxes and levies were substantial;
2.
The purchaser at a sale in execution is
responsible to pay the above expenses;
3.
In a private sale, the seller will be
responsible to pay the above expenses;
4.
The respondents did not pay such
expenses for a prolonged period of time;
5.
The only manner to proceed with
transfer is if the seller takes liability and/or deducts such amount
from the sale proceeds.
[11]
The matter was subsequently set down for hearing for 1 September
2020.
[12]
The respondents filed their answering affidavit on 27 August 2020.
The answering affidavit was accompanied by an affidavit
deposed to by
Ms Susanna Strydom, an attorney and conveyancer, practising as such
under the name and style of Susan Strydom Inc,
wherein she confirmed
that:
1.
She received instructions on 22 June 2020
from Far Properties Estate Agency to attend to the transfer of the
property from the respondents
to Molefi Piet Ntleru, married in
community of property to Lorraine Ntleru.
2.
The purchase price of the property is an
amount of R10 300 000.00 (Ten Million Three Hundred Thousand Rand).
3.
Mr Ntleru, initially indicated that the
property will be purchased by cash. However, due to the COVID-19
pandemic and lockdown restrictions
payments from his clients was not
forthcoming as usual. Mr Ntleru, therefore, made alternative plans.
4.
In terms of the offer to purchase, Mr
Ntleru was obliged to provide guarantees for the purchase price on or
before 4 August 2020,
which was in actual fact the period in which
the purchase price would have been paid into the trust account of the
attorney. Because
of the delayed payment, Mr Ntleru secured a loan
from the bank to expedite matters.
5.
On 29 July 2020, the parties agreed to
extend the period for the provision of the guarantees to 20 August
2020, as Mr Ntleru was
having problems with the banks in respect of
valuations of the property.
6.
On 29 July 2020, Mr Ntleru obtained
approval of a bond with Investec Bank in the amount of R5 600
000.00.
7.
The purchasers also paid an amount of
R3 500 000.00 into the trust account of Tintingers Inc, which
amount has been invested
with Investec Bank in an interest-bearing
account for the purchasers in terms of
Sections 86(4)
and
86
(5) of
the
Legal Practice Act, No 28 of 2014
.
8.
An amount of R1 200 000.00 is still
outstanding in respect of the purchase price.
9.
On 26 August 2020, the purchasers obtained
further finance in the amount of R1 600 000.00 through Absa Bank
by registering
a bond over another immovable property of the
purchasers, being Unit [....], SS Hereford, Township Irene Extension
193.
10.
It is clear that the full purchase price
has been paid. There are sufficient funds to pay all the expenses of
the property as well
as transfer fees.
11.
The purchasers confirmed that the amount of
R1 200 000.00 following the bond registration referred to
is available for
this sale transaction.
12.
Consequently, the full purchase price of
R10 300 000.00 has been paid and/or secured through bank
loans. Furthermore,
the purchaser has confirmed to pay the
outstanding amounts relating to levies, rates and taxes.
[13]
On 11 September 2020, Absa filed a replying affidavit. On 23 October
2020, Mr Ntleru and Ms Ntleru filed an application to
intervene. The
application to intervene was not opposed. The intervening parties
clearly have a legal and financial interest in
the application. Leave
was granted to them to intervene.
[14]
On 30 October 2020, Mr Naude filed a supplementary affidavit. Mr
Naude stated that he currently still had a sufficient amount
of cash
available to purchase the property at the reserve price and to cover
the cost associated with the purchase and tendered
an amount of R9
800 000.00 (eight million nine hundred thousand Rand) in respect of
the purchase price for the property. He further
stated that he had
considered the purchase offer by the intervening parties and noted
that once the commission of R515 000.00 (five
hundred and fifteen
thousand Rand), that is payable to the estate agent, is deducted from
the purchase price of R10 300 000.00
(ten million three hundred
thousand Rand) the amount available to the judgement creditor is R9
785 000.00 (nine million seven hundred
and eighty five thousand
Rand). He therefore submit that, as the highest bidder on auction,
his current offer of the reserve price
can be accepted as part of the
execution process and that it is in fact more favourable to the
judgement creditor as well as the
judgement debtor than the offer by
the intervening parties. He accordingly formally offered to increase
his bid to purchase the
property at the full reserve price of R9 800
000.00 (eight million nine hundred thousand Rand).
RULE
46A(9)
[15]
Rule 46
A (9) of the Uniform Rules of court provides as follows:
"(9)(a) In an
application under this rule, or upon submissions made by a
respondent, the court must consider whether a reserve
price is to be
set. (b) In deciding whether to set a reserve price and the amount at
which the reserve is to be set, the court
shall take into account-
(i) the market value
of the immovable property;
(ii) the amounts owing
as rates or levies;
(iii)
the amounts owing on registered mortgage bonds;
(iv)
any equity which may be realised between the reserve price and the
market value of the property;
(v) reduction of the
judgment debtor's indebtedness on the judgment debt and as
contemplated in subrule (5)(a) to (e), whether or
not equity may be
found in the immovable property, as referred to in subparagraph (iv);
(vi) whether the
immovable property is occupied, the persons occupying the property
and the circumstances of such occupation;
(vii) the likelihood
of the reserve price not being realised and the likelihood of the
immovable property not being sold;
(viii) any prejudice
which any party may suffer if the reserve price is not achieved; and
(ix) any other factor
which in the opinion of the court is necessary for the protection of
the interests of the execution creditor
and the judgment debtor.
(c) If the reserve
price is not achieved at a sale in execution, the court must, on a
reconsideration of the factors in paragraph
(b) and its powers under
this rule, order how execution is to proceed.
(d) Where the reserve
price is not achieved at a sale in execution, the sheriff must submit
a report to the court, within 5 days
of the date of the auction,
which report shall contain-
(i) the date, time and
place at which the auction sale was conducted;
(ii)
the names, identity numbers and contact details of the persons who
participated in the auction;
(iii)
the highest bid or offer made; and
(iv)
any other relevant factor which may assist the court in performing
its function in paragraph (c).
(e) The court may,
after considering the factors in paragraph (d) and any other relevant
factor, order that the property be sold
to the person who made the
highest offer or bid.
[16]
It is clear from a reading of Rule 46A(9)(e) that the court has a
discretion to order that the property be sold to the person
who made
the highest offer or bid. In the exercise of its discretion the court
must consider the factors set out in subparagraph
(b), as well as any
other relevant factor prior to making its decision.
[17]
The following relevant factors were taken into account:
1.
The intervening parties made an offer to
purchase the property on 21 June 2020 for R10 300 000.00,
which was accepted
by the respondents.
2.
The offer was much higher than the
value attained at the auction in execution, being R7 200 000.00.
3.
The intervening parties have already
paid an amount of R6 300 000 in respect thereof, and have
obtained bank guarantees for
the balance.
4.
The intervening parties also tendered
to pay additional costs including clearance amounts from the
homeowner's association and the
municipality.
5.
Mr Naude, had subsequently, on 23
October 2020, tendered to purchase the property for R15 000 more
than the intervening parties
have offered.
[18]
There can be no doubt that the offer of R 7 200 000.00 made
by Mr Naude at the sale in execution cannot be confirmed.
In
Hancock
and Another v Nedbank Limited and Others
[1]
,
the immovable property was sold at the sale in execution for an
amount of R2 200 000.00, which was R800 000 below
the
reserve price. The execution debtors subsequently sold the property
after the sale in execution for a higher amount, namely
R5 380 000.00. The court held that common sense and the
interest of justice demands that the court should bring finality
to
the issues in question, and found that the subsequent offer of
R5 380 000.00 should prevail. The facts in
Hancock
are distinguishable from the facts in the present matter. In the
present matter the court is faced with two competing offers, where
the difference in price is a mere R15 000. Under the circumstances, I
decline to make any order in terms of Rule 46A(9)(e). The
sale
whereby Mr Naude, as the highest bidder, provisionally purchased the
property is not confirmed.
[19]
Rule 46A(9)(c), states that if the reserve price is not achieved at a
sale in execution, the court must order how execution
is to proceed.
This entails a reconsideration of the factors in subparagraph (b) as
well as the courts powers under the Rule 46A.
In the reconsideration
of the factors, there is no reason to increase the reserve price. In
fact, it is clear from the figures
provided to the court that the
outstanding property rates, water charges, home owners association
levies and current outstanding
balance have all increased
significantly. There is no suggestion from Absa Bank, the respondents
nor the intervening parties that
this is a situation where the court
should make an order that another sale in execution should be held.
It is only Mr Naude that
requests that such an order be made in the
event that the court refuses to make an order in terms of Rule
46A(9)(e) and does not
declare him the successful bidder.
[20]
It is common cause that the reserve price of R9 800 000.00
was not achieved at the sale in execution. It is in the
best interest
of both judgment debtor and judgment creditor that the property be
sold as soon as possible. Absa Bank, as the registered
bond holder
and judgment creditor, is now in possession of two offers for amounts
that are more than the reserve price. Absa Bank
is in the best
position to consider both offers and to make a decision whether to
accept any of the offers. If it decides not to
accept any of the
offers, it would be within its rights to instruct the Sheriff to sell
the property on a sale in execution.
COSTS
[21]
The respondents and the intervening parties seek a costs order
against Absa Bank and Mr Naude. It is trite that costs are in
the
discretion of the court. The discretion must be exercised judicially,
having regard to all the relevant facts and circumstances
of each
case. The factors relevant to the exercise of the court’s
discretion are,
inter
alia
,
the nature of the litigation, the conduct of the legal
representatives, and the conduct of the parties.
[2]
[22]
Rule 46A (9)(c) and (d) are peremptory. The court must, on a
reconsideration of the relevant facts, order how execution is
to
proceed if the reserve price is not achieved at the sale in execution
and the Sheriff must submit a report to the court whereafter
the
court may order that the property be sold to the person who made the
highest bid. It would be incumbent on the attorney acting
on behalf
of the execution creditor (Absa Bank), to ensure that the Rules are
complied with.
[23]
Instead of submitting the Sheriff’s report for consideration
before a judge in chambers and leave it in the discretion
of such
judge to refer to open court, Absa Bank decided to launch application
proceedings in court. When the respondents got heed
of the
application they filed a notice to oppose and incurred costs in
instructing counsel to argue the matter in open court. Absa
Bankin
fact filed an affidavit, akin to an opposing affidavit. It is in this
affidavit that Absa Bank casted aspersions on Ms Strydom
and made
mention of the fact that Mr Ntleru and Mrs Ntleru’s
“confirmation” was not before court and that it
is
doubtful that they are even aware of these proceedings. This left the
intervening parties with no alternative but to intervene,
and to
incur costs by instructing counsel to bring their views and set out
their material interests, as factors for the court to
consider. This
could all have been avoided if Absa Bank did not rush to court to
launch application proceedings, but approached
court in chambers to
consider the Sheriff’s report. It would then have been in the
discretion of that judge to refer the
matter to open court and to
determine what additional evidence would be required.
[24]
The application necessitated counsel for the respondents as well as
the intervening parties to file heads of argument and the
matter
proceeded on an opposed basis. Throughout, until literally at the
latest hour, both Absa and Mr Naude maintained that the
offer at the
sale in execution should be accepted, despite the fact that both had
been aware that a much better offer was made
by the intervening
parties. Belatedly, Absa Bank changed tack and indicated that it will
not be opposing the application for intervention
and will adopt a
neutral attitude.
[25]
A few days before the application was to be heard, Mr Naude decided
to offer a mere R15 000.00 more for the property than
what the
intervening applicant had offered, clearly in an attempt to try and
thwart the intervening applicant’s contract
of sale.
[26]
I am satisfied that this is an appropriate case where the second and
third applicants should be ordered to pay the costs of
the
respondents and intervening applicants on an opposed motion scale.
L.
WINDELL
JUDGE
OF THE HIGH COURT
GAUTENG
LOCAL DIVISION, JOHANNESBURG
Electronically
transmitted therefore unsigned
Delivered:
This judgment was prepared and authored by the Judge whose name is
reflected and is handed down electronically by circulation
to the
parties/their legal representatives by email and by uploading it to
the electronic file of this matter on CaseLines. The
date for
hand-down is deemed to be 24 December 2020.
APPEARANCES
COUNSEL
FOR FIRST & SECOND APPLICANT: ADV.
C. DÉNICHAUD
ATTORNEYS
FOR FIRST & SECOND APPLICANT: JAY MOTHOBI INC
COUNSEL
FOR THIRD APPLICANT:
ADV S.J. COETZEE SC
ATTORNEYS
FOR THIRD APPLICANT:
NAUDE AND NAUDE ATTORNEYS
COUNSEL
FOR THE RESPONDENTS:
ADV. S.J. VAN RENSBURG SC
RESPONDENT’S
ATTORNEYS:
JC SCHEEPERS ATTORNEYS
ATTORNEYS
FOR THE INTERVENING PARTIES: TINTINGERS INC
DATE
OF HEARING:
2 NOVEMBER 2020
DATE
OF JUDGMENT:
4 DECEMBER 2020
DATE
OF PROVISION OF WRITTEN REASONS
FOR
JUDGMENT:
24 DECEMBER 2020
[1]
(905/2018)
[2019]ZAFSHC 219 (14 November 2019)
[2]
Biowatch
Trust v Registrar, Genetic Resources
2009 (6) SA 232
(CC) at paras [7] – [9].