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[2013] ZASCA 61
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Todd v First Rand Bank Ltd and Others (497/12) [2013] ZASCA 61; [2013] 3 All SA 500 (SCA) (24 May 2013)
THE SUPREME COURT OF APPEAL OF SOUTH AFRICA
JUDGMENT
Case no
: 497/12
Reportable
In the
matter between:
Elizora
Olivier Todd
.......................................................................................
Appellant
and
First Rand Bank Ltd
...........................................................................
First
Respondent
The Sheriff of the High Court, Malmesbury
...............................
Second
Respondent
Frederick Jacobus van Zyl
.............................................................
Third
Respondent
Timothy Oliver Price
......................................................................
Fourth
Respondent
Daniel Pierre Fourie
...........................................................................
Fifth
Respondent
Ms Joan Booysen
.............................................................................
Sixth
Respondent
Standard Bank of South Africa Ltd
............................................
Seventh
Respondent
Neutral citation:
Todd v First Rand Bank
(497/11)
[2013] ZASCA 61(14 May 2013)
Coram:
Lewis and Ponnan JJA and Willis AJA
Heard:
14 May 2013
Delivered: 24 May 2013
Summary:
Where non-compliance with a requirement of Rule 46 of
the Uniform Rules of Court is not material, does not defeat the
purpose of
the requirement and does not prejudice the judgment debtor
a sale in execution is not invalid solely by reason of the
non-compliance.
ORDER
On
appeal from Western Cape High Court, Cape Town (Binns-Ward J sitting
as court of first instance)
The appeal is dismissed with costs.
JUDGMENT
LEWIS JA ( PONNAN and WILLIS JJA concurring)
[1] This appeal concerns the validity of a sale of a house in
execution of a judgment debt. The only issue to be determined is
whether the failure to comply with one of the requirements for such
sales vitiated the sale which should accordingly be set aside.
Sales
of immovable property in execution of judgments are governed by rule
46 of the Uniform Rules of Court. Non-compliance in
this matter,
which was admitted, was in respect of rule 46(7)(
e
) which
requires that: ‘Not less than 10 days prior to the date of the
sale, the sheriff conducting the sale shall affix one
copy of the
notice on the notice-board of the magistrate’s court of the
district in which the property is situate, . . .
and one copy at or
as near as may be to the place where the said sale is actually to
take place.’ A copy was not affixed
at or near the property to
be sold in execution. All other requirements of the rule were met.
[2] The appellant, Ms Elizora Todd, formerly a co-owner of the
property, brought an application in the Western Cape High Court
for
an order that the sale be set aside. Binns-Ward J held that the
failure by the Deputy Sheriff to affix the notice at or as
near as
may be to the property did not go to the root of the matter and did
not invalidate the sale by auction that took place.
The appeal
against the decision lies with the leave of this court.
[3] On appeal Todd argues that the high court erred in finding that
the common law does not require strict compliance, but that
if this
is not so, the common law ought to be developed to require strict
compliance with rule 46 in order to promote the spirit,
purport and
objects of sections 25(1) and 34 of the Constitution. This argument
was raised for the first time on appeal. I shall
deal with the
questions whether the common law requires strict compliance with the
requirements of rule 46 and (briefly) whether
the common law should
be developed along the lines suggested by Todd after relating the
facts giving rise to the application in
the high court.
[4] Todd was a co-owner, together with her estranged husband, of Erf
2755, Malmesbury, a residential property. They had bought
it from
Todd’s father, Mr Gert Olivier, borrowing funds from the
respondent, First Rand Bank Ltd, for this purpose. The bank
registered a mortgage bond over the property as security for the debt
owed to it. Todd and her husband failed to pay the bank what
they
owed under the mortgage bond. At the time when it took judgment
against them they owed close to R400 000, having failed
to pay
more than 30 monthly instalments. The property was declared
executable on 22 January 2007, and judgment was given in the
sum of
R1 296 782 plus interest and costs.
[5] For about four years the bank did not sell the property in
execution, agreeing on several occasions to accept payment offers
by
Olivier, a retired attorney, who occupied the house. Indeed it is
Olivier who deposed to the founding and replying affidavits
in the
application. At least six sales in execution were arranged between
July 2009 and January 2010. All were cancelled by the
bank as a
result of settlement negotiations between it and Olivier. Olivier did
not make the payments agreed. He did, however,
agree that the
property could be advertised for sale on the bank’s ‘Quicksell’
programme which facilitated the
sale of properties declared
executable. No sale resulted from offering the property for sale in
this way even though the house
was marketed by the bank for six
months. The bank eventually decided to sell the property at a public
auction and took the steps
necessary to do so.
[6] The Deputy Sheriff for Malmesbury followed all procedures bar
one. He did not affix the sale notice at or near the property.
He
did, however, on 6 October 2010, take the notice advertising the sale
scheduled for 16 August to the house, intending to affix
it there. He
was met by Olivier to whom he explained that he needed to affix it to
the property. Olivier took the notice from him.
Thinking that
personal service was better than affixing the notice to the property
(and thus not comprehending that the notice
was to the public and not
to the occupier or owner who already had notice), he did not do
anything further. Olivier at some stage
advised his attorney that the
notice had not been affixed.
[7] On 11 October, some five days after receiving the notice,
Olivier’s attorney called the Deputy Sheriff and told him that
the notice had not been affixed. On the same day the Deputy Sheriff
put up another notice on a board outside the house indicating
that a
sale in execution would be held on 16 August. That notice was, of
course, out of time, and in any event did not contain
the particulars
required about the property to be sold. In any event it was removed
shortly after being erected and the culprit
was not identified.
[8] The sale by auction took place on 16 August 2010. There were few
people present. The third respondent, Mr Frederick van Zyl,
and his
wife bought the property for R860 000. The municipal valuation
at the time was R1 723 000. The parties do
not agree that
that is the market value of the property but it is clear that it was
worth substantially more than the price agreed
and paid.
[9] At the hearing of the application by Todd to set the sale aside,
on 20 September 2010, the high court granted an order by agreement
between Todd and the bank that the bank would instruct the Deputy
Sheriff not to proceed with the transfer of the property to Van
Zyl.
Despite this, and apparently because of some confusion in the office
of the conveyancing attorneys, transfer was effected
to Van Zyl and
his wife on 1 October 2010. It is not disputed that the Van Zyls had
knowledge of the allegation that the sale was
invalid before transfer
to them was effected.
[10] The Deputy Sheriff launched an application in the Western Cape
High Court to have the transfer set aside. Van Zyl and his
wife
opposed that application, but took the view that the question of the
sale’s validity ought first to be determined since
if it were
decided that the sale in execution were valid the application for
retransfer of the property would fall away. He accordingly
sought to
join the bank in opposing Todd’s application, on the same
ground as did the bank, and this was permitted.
The common law on compliance with rule 46
[11] Our courts have adopted a strict approach to compliance with the
prescribed formalities for a sale in execution, following
passages in
the Roman Dutch authorities. These are extensively set out in the
recent decision of this court in
Menqa & another v Markom &
others
1
and I do not propose to repeat what is said there. In particular this
court referred to Matthaeus II’s
De Auctionibus
2
where the writer concluded that (in the words of Cloete JA)
3
‘although all the requisite formalities must be strictly and
precisely complied with, the proceedings are not vitiated by
non-compliance with an insignificant formality which does not go to
the root of the matter.’
Cloete JA continued:
‘
Examples
given of the latter type of formalities include where the official
did not properly record a description of movable goods
attached or
for how much each article was sold, where the advertisements were put
up on three and not four market days and where
the King’s
standard was not displayed at the immovable property to be sold. In
these and similar cases, says Mattheus, the
sale remains for value
because the authorities do not have regard to trivialities and it
would be contrary to good faith to split
hairs over every small legal
subtlety.’
[12] As this court pointed out in
Menqa
, because legislation
(and I would add the rules of court) regulate the requirements that
must be met for a valid sale in execution,
resort to the Roman Dutch
authorities is not always helpful. What is helpful, however, is the
basic principle that non-fulfilment
of a requirement will not vitiate
a sale in execution if it does not ‘go to the root of the
matter’. That raises the
question whether the non-compliance
with rule 46(7)(
e
) did go to the root of the matter –
that is, in my view, whether it defeated the object or purpose of the
subrule and caused
prejudice to Todd. The enquiry entails a
consideration of the reason for the formality, the extent of the
non-compliance and the
prejudice or potential prejudice to interested
parties, especially the judgment debtor.
4
[13] The high court in this matter concluded that the ‘affixment
provision’ in the subrule might ‘fairly be regarded
as
what has been termed “a slight formality”. There is
nothing in the evidence to suggest that non-compliance with
the
requirement could be said to have gone “to the root of the
matter”.’ Todd argued that rule 46(7)(
e
) embodies
important formalities: the notice to be affixed at or near the
property advertises the sale of the property and informs
the public
of its nature. The purpose is to ensure that the proper and fair
value of the property is realized.
[14] That may be so. But affixing the notice at or near the property
to be sold is but one of the requirements and one must examine
whether,
in this case
, it was material in achieving that
purpose. The sale must also be advertised in the
Government
Gazette
and in a newspaper circulating in the district in which
the property is situate. The advertisement, which must set out all
the
particulars of the property, must also be placed on a notice
board in the magistrate’s court in the district ten days before
the sale is scheduled to take place. These requirements were met.
[15] The high court held that the evidence suggested that the
affixing of the notice at or near the property, in this case, would
not have had any material effect. The property, in a small town in
the Western Cape, had been marketed on the bank’s Quicksell
programme for some six months and had elicited no interest. Olivier,
who occupied the property, had for a substantial period delayed
the
sale. The bank and Van Zyl, who was qualified as an estate agent and
who had previously speculated in property in the area,
maintained
that there were no other interested buyers; and that placing the
notice on a board outside the property would have served
no purpose
since it was in a quiet area where there was little pedestrian or
other traffic.
[16] The bank relied also on the statement in
Botha & another
v Absa Bank Ltd & another
5
where the court held that such a notice did not have to be visible to
people on the street where the property was situate. In that
case the
notice was affixed at an office which could not be seen from the
street. The court said:
‘
The
rule is complied with when a copy of the notice where the actual sale
is to take place is displayed, without further ado. The
rule places
no obligation on the . . . [bank] to satisfy the idle curiosity of
pedestrians on the sidewalk . . .’.
[17] Todd relied on
Messenger of the Magistrate’s Court,
Durban v Pillay
6
in which this court held that the provisions of rule 40 (the
predecessor to rule 46) were peremptory, and that where the
advertisement
did not set out the details of the property to be sold
the sale should be set aside. Van den Heever JA said:
7
‘
The
provisions of rule 40(6) were conceived in the interests of the
judgment debtor and the judgment creditor. Disobedience to its
directions may cause the debtor to be despoiled without a
corresponding reduction of his liabilities and satisfaction of his
creditors.’
[18] Todd argued that we do not know what the effect of not affixing
the notice was. The argument ignores the probabilities and
the
evidence of the bank and of Van Zyl. It also ignores the fact that
the property was marketed for a long period before then;
that
Olivier, who knew it had to be affixed at or near the property, took
the notice from the Deputy Sheriff; that when Olivier
did alert the
Deputy Sheriff that there was no notice affixed, the latter put up
another notice (albeit a deficient one) which
disappeared shortly
afterwards; that the property is in a quiet area and that it was
unlikely that passers-by would have paid any
attention to it; and
that it was known in the area that Olivier would frustrate the sale.
That evidence was not disputed in a reply
by Olivier and must be
accepted as correct. I consider that the high court thus correctly
found that the non-compliance did not
defeat the object of the rule.
The development of the common law
[19] Todd argued before this court that if the common law is such as
to permit a sale in execution despite non-compliance with
a subrule
of rule 46 then the law ought to be developed to require strict
compliance. The rationale for such development is that
s 25(1) of the
Constitution precludes the arbitrary deprivation of property.
Deprivation by virtue of a sale in execution would
not be arbitrary
if there was strict compliance, it was argued. The other right
allegedly implicated is that of access to courts,
entrenched in s 34
of the Constitution. The argument is that that right includes the
lawful execution of orders and judicial oversight
of the process of
execution, and that the judgment of the high court, in effect
condoning non-compliance with one of the steps
required for a sale in
execution to take place, denies the right.
[20] The constitutional argument was raised for the first time on
appeal. It has not been possible for the respondents to adduce
evidence that would show that Todd’s constitutional rights have
not been infringed. In any event, it is difficult to see
how
constitutional rights could be infringed in this case. If anything,
it is the Van Zyls’ right to possession of the property
that
has been infringed by Olivier. The judgment in execution was lawful.
The sale was advertised and properly conducted. Todd
and Olivier had
ample notice of the proposed sale. Todd had been in default for over
four years. Olivier had the benefit of occupation
for far longer than
he should have done, at the expense of the bank and, latterly of Van
Zyl. Requiring the reversal of all the
steps leading to the sale and
the transfer of the property to the Van Zyls would be a costly
exercise in futility and unfairness.
[21] I can see no reason to change the common law. The proposed
requirement, that there be strict compliance with every requirement
of rule 46 for a sale in execution to be valid, would limit the
ability of a court to ensure that the interests of justice and
fairness are served. The common law allows a court to condone
non-compliance only where it does not go to the root of the matter.
As I have said, that entails an enquiry whether the failure to
observe a requirement defeats the purpose of the rule or subrule
and
that prejudice would be suffered by the debtor if absolute compliance
were not required. That test gives the court the discretion
to
determine what effect the non-compliance has had – whether it
prejudices the judgment debtor, or whether the judgment
creditor (who
may not be responsible for the failure to observe a formality, as was
the case here) will be prejudiced by an order
that the sale is
invalid. A requirement of absolute strict compliance could operate
harshly against both debtors and creditors
and might have unjust
consequences.
[22] That does not mean that creditors and court officials should not
comply with the requirements of rule 46, nor that any or
every
failure to comply should be treated with leniency. As Binns-Ward J
said in the high court:
‘
This
judgment should not be misread to afford a warrant to anyone to not
comply punctiliously with all the requirements of the rules
of court.
This application was refused only because of the relative slightness
of the formality involved and the lack of materiality
. . . in the
peculiar context.’
The high court accordingly correctly refused the application and the
appeal must be dismissed.
[23] There is one final matter that requires mention. The high court
characterised the Deputy Sheriff’s action as administrative
in
nature and said that the rules for judicial review were pertinent.
That is not so. A sale in execution is a procedure executed
by an
official of the court in terms of the Uniform Rules of Court. It is
not an administrative action and is not subject to review
as such. If
the official fails to comply with the rules, and the non-compliance
does go to the root of the matter, the sale in
execution (or any
other court process similarly affected) will be invalid. Review
proceedings are not required to set it aside.
So too, the invalid act
does not stand and have legal consequences until it is set aside.
Costs
[24] Todd argued that costs should not follow the cause if the appeal
did not succeed. She had in good faith attempted to argue
on appeal
that the high court had erred in refusing the application and if not,
that the common law should be developed in accordance
with the
injunction in s 39(2) of the Constitution to give effect to the
spirit, objects and purport of the constitution. The respondents,
however, argued that the litigation was between private parties, and
had not been cast as a constitutional matter until the appeal
was
argued.
[25] In my view there was no justification for Todd’s arguments
on appeal. Throughout the course of the litigation Todd has
sought to
evade the consequences of her own default in repaying the loan to the
bank. Her father, Olivier, has remained the occupier
of the house
despite the repeated attempts by the bank to sell the property in
execution of the debt. And the issue on appeal is
not of general
significance to judgment debtors or creditors. The validity of the
sale in execution turns on the peculiar facts
of the case and no new
principle of general application has been decided. Accordingly the
respondents are entitled to costs.
[26] For these reasons the appeal is dismissed with costs.
___________
C H Lewis
Judge of Appeal
APPEARANCES:
For
appellant: S Wilson (with him I De Vos)
Instructed
by: Seri Law Clinic
Braamfontein,
Johannesburg
Van
Pletzen Lambrechts Attorneys
Bloemfontein
For
First Respondent: D van Reenen
Instructed
by: Cohen Shevel & Fourie
Parow,
Cape Town
Honey &
Partners
Bloemfontein
Malmesbury
For
Third Respondent: D van der Merwe
Instructed
by: Du Plessis & Mostert Attorneys
Malmesburty
Symington
& De Kok Attorneys
Bloemfontein
1
Menqa
& another v Markom & others
2008 (2) SA 120
paras 31-42.
2
De
Auctionibus Libri Duo
: see the full citation in
Menqa
para 31 fn 32. See also
Joosub v JI Case SA (Pty) Ltd
1992
(2) SA 665
(N) at 670A-672F and the authorities cited there.
3
Para
31.
4
Menqa
para 46.
5
Botha
& another
v
Absa Bank Ltd & another
[2002]
1 All SA 579
(SE) para 11.
6
Messenger
of the Magistrate’s Court, Durban v Pillay
1952 (3) SA 678
(A).
7
At
684A-B.