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[2019] ZAGPPHC 104
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City of Johannesburg Metropolitan Municipality v Sheriff of the High Court Randburg South West and Others (42498/2016) [2019] ZAGPPHC 104 (19 March 2019)
THE REPUBLIC OF SOUTH AFRICA
IN THE HIGH
COURT OF SOUTH AFRICA
GAUTENG DIVISION, PRETORIA
(1)
REPORTABLE:
NO
(2)
OF
INTEREST TO OTHER JUDGES: NO
(3)
REVISED.
CASE NO:
42498/2016
19/3/2019
In the matter between:
THE CITY OF JOHANNESBURG
METROPOLITAN
MUNICIPALITY
Applicant
and
THE SHERIFF OF THE HIGH COURT
RANDBURG SOUTH
WEST
First Respondent
XPLORE AFRIKA
PROPERTIES (PTY) LIMITED
Second Respondent
CAPE ROCK
PROPERTY TRADING (PTY) LIMITED
Third Respondent
AD
CLICK
AFRICA (PTY) LIMITED
Fourth Respondent
THE REGISTRAR OF
DEEDS, PRETORIA
Fifth Respondent
BUSINESS PARTNERS
LIMITED
Sixth Respondent
JUDGMENT
AC BASSON, J
The parties:
[1]
The applicant is the City of Johannesburg
Metropolitan Municipality
(“the
City”) and is a metropolitan municipality as defined in section
1 of the Local Government: Municipal Systems Act
[1]
(“Systems Act”). The City has a constitutional duty
to render municipal services
to
all properties within its municipal boundary. The City must
implement debt collection and credit control measures to provide
municipal services in a sustainable manner.
[2]
The first respondent is the Sheriff of the
High Court, Randburg West (“the Sheriff”) appointed as
such in terms of the
provisions of the Sheriffs Act.
[2]
The other respondents are Xplore Afrika Properties (Pty) Limited,
Cape Rock Property Trading (Pty) Limited,
Ad
click
Africa (Pty) Limited, the Registrar of Deeds, Pretoria and Business
Partners Limited. Only the first respondent remained
relevant
in this application. The City no longer seeks any relief
affecting the second to sixth respondent. Although
the third
respondent filed answering papers, there was no appearance on behalf
of the third respondent.
[3]
A Sheriff is an impartial independent
officer of the Court appointed by the Minister of Justice in terms of
the Sheriffs Act. The
role of the Sheriff is to execute, in
accordance with the Uniform Rules of the High Court, all sentences,
decrees, writs, summonses,
rules, orders, warrants, commands and
processes directed to him or her. The Uniform Rules of Court, which
constitute the procedural
machinery of the Courts, are intended to
support and expedite the business of the Courts.
What is before the Court?
[4]
Initially
the City sought an order setting aside the sale of execution held on
10 September 2015 by the Sheriff in respect of an
immovable property
to the third respondent (prayer 1 of the Notice of Motion). The
applicant no longer persists with this
relief. The City also no
longer persists with seeking an order that the fifth respondent (the
Registrar of Deeds) cancel
the transfer and registration of the
property in the name of the third respondent and retransferring and
registering the property
into the name of the second respondent
(prayer 2 of the Notice of Motion). The applicant also no
longer seeks an order in
terms of prayers 3, 4, 5 and 7 of the Notice
of Motion.
[5]
In
respect of prayer 5, the applicant sought an order which requires
this Court to interpret section 118(3) of the Systems Act.
More in
particular, the City sought an order that the Sheriff be compelled,
pursuant to any sale of property in execution, to include
payment of
any outstanding municipal debt due to the applicant in the
distribution account and to pay to the City such amount from
the
proceeds of such subsequent sale in preference over any mortgage bond
registered against the property as provided for in section
118(3) of
the Systems Act, without the necessity of a judgment or a court
order. In order to grant this order, it would be
necessary for
this Court to confirm that, on a proper interpretation of s 118(3) of
the Systems Act, security is afforded to the
applicant which arises
ex
lege
once a debt is owed on a property and
if
such debt
remains
unpaid, such security is not conditional on the City obtaining a
court order and thereafter registering this court order
against the
title deed of the property specifically pertaining to sales in
execution. In brief, the City contends that section
118(3) of
the Systems Act does not require a municipality to perfect its
security before it becomes a preferent creditor and that
the
preference occurs by operation of law. More in particular, it
is contended that where a property is sold by private treaty
or a
sale in execution, a municipality already enjoys the preference in
terms of s 118(3) by operation of law and it may enforce
its claim to
the proceeds realized on the sale.
[6]
Although
the City no longer seeks the relief in terms of prayer 5 of the
Notice of Motion, counsel on behalf of the City submitted
that this
Court should, nonetheless pronounce on it. I do not agree.
Although it might well be necessary for another Court
to revisit and
interpret the purport of section 118(3) of the Systems Act, the
relief sought in prayer 5 is no longer before this
Court and
declaratory relief merely for the sake of clarifying a difference of
opinion regarding the interpretation of a section
of an act, is not
appropriate. There clearly is no longer a live dispute
[3]
between the parties in light of the abandonment of
the relief sought in prayer 5 of the Notice of Motion and I am not
persuaded
that the present application as it now stands, warrants
this Court to consider the declaratory relief sought by the City in
prayer
5 of the Notice of Motion. The question has, in any
event, to a large extent became academic for the reasons stated. In
JT Publishing (Pty) Ltd v Minister of
Safety and Security
[4]
,
the Constitutional Court explained:
“
[A] declaratory order is a
discretionary remedy, in the sense that the claim lodged by an
interested party for such an order does
not in itself oblige the
Court handling the matter to respond to the question which it poses,
even when that looks like being capable
of a ready answer. A
corollary is the judicial policy governing the discretion thus vested
in the Courts, a well-established and
uniformly observed policy which
directs them not to exercise it in favour of deciding points that are
merely abstract, academic
or hypothetical ones. I see no reason
why this new Court of ours should not adhere in turn to a rule that
sounds so sensible.”
Uniform Rule 46:
[7]
The only remaining issue to be decided is
whether,
on a proper interpretation of Rule 46 of the Uniform Rules of Court,
the Sheriff complied with her substantive and procedural
obligations
to implement and adhere to the processes and time lines as required
in terms of this rule. I should emphasise
that the old Uniform
Rule 46 was applicable at the time. Uniform
Rule 46 was
amended on 17 November 2017. The relevant sale in execution took
place on 10 September 2015.
[8]
The parties hold different views in respect
of the Sheriff’s level of compliance and also in respect of the
interpretation
of Rule 46(5) of the Uniform Rules and the obligations
created thereunder. Uniform Rule 46(4)(b) and Uniform Rule 46
(5)(a)
and (b) (of the old Rules) read as follows:
“
4(b)
Upon
receipt of written instructions from the execution creditor to
proceed with such sale, the sheriff shall ascertain and record
what
bonds or other encumbrances are registered against the property
together with the names and addresses of the persons in whose
favour
such bonds and encumbrances are so registered and shall thereupon
notify the execution creditor accordingly.
(5) No immovable
property which is subject to any claim preferent to that of the
execution creditor shall be sold in execution unless—
(a)
the execution creditor has caused notice, in writing, of the intended
sale to be served by registered post upon the preferent
creditor, if
his address is known and, if the property is rateable, upon the local
authority concerned calling upon them to stipulate
within ten days of
a date to be stated a reasonable reserve price or to agree in writing
to a sale without reserve; and has provided
proof to the sheriff that
the preferent creditor has so stipulated or agreed, or
(b)
the sheriff is satisfied that it is impossible to notify any
preferent creditor, in terms of this rule, of the proposed sale,
or
such creditor, having been notified, has failed or neglected to
stipulate a reserve price or to agree in writing to a sale without
reserve as provided for in paragraph (a) of this subrule within the
time stated in such notice.”
[9]
In order to decide whether the Sheriff has
complied with her obligations, it must,
inter
alia
, be considered whether
the
notice sent by the execution creditor (the sixth respondent -
Business Partners) to the City was required to be sent to a specific
(designated) official at the City as contended by the City.
Facts:
[10]
The transaction at issue in this
application is referred to as the “Ferndale” property
[5]
- a property that falls within the jurisdiction of this court.
[11]
The Sheriff was instructed to sell the
Ferndale property in execution by way of public auction. The Sheriff
set the date for the
sale in execution of the property for 10
September 2015.
[12]
On 24
July 2015 (posted on 13 August 2015) the execution creditors’
attorneys invited the City to place a reasonable reserve
price in a
registered letter and called upon the City to do so by no later than
ten (10) days before the sale date. The City was
also informed that
the Ferndale property would be sold in execution on 10 September
2015. The registered letter was addressed
to “City of
Johannesburg Clearance Department, P.O. Box 5000, Johannesburg,
2000”.
[13]
On 9
September 2015 (a day before the sale in execution) the City
addressed a letter to
auctions@sheriffrsw.co.za
requesting a
reserve price of R340 000.00. The Sheriff states that she
never received the mail as this e-mail address
is incorrect. This
denial is consistent with what is stated by the City. In the
founding affidavit, the City in fact
identifies the various e-mail
addresses used by the Sheriff:
auctions@sheriffrandburgsw.co.za
;
general@sheriffrandburgsw.co.za
;
complaints@sheriffrandburgsw.co.za
and
lephadi@sheriffrandburgsw.co.za. The e-mail addressed used by
the City on 9 September 2015 pertaining to the Ferndale
Property is
not one of these. The Sheriff explains that even if the e-mail
had been received by her office it would, at best
have triggered her
obligations under the Auction Regulations of the Consumer Protection
Act
[6]
causing her to inform potential purchaser at the action of the
potential charge on the property.
[14]
On 10
September 2015, the Sheriff sold the Ferndale property in a sale in
execution without a reserve price. The City blames
the Sheriff
for this state of affairs. What it says is that, because the
relevant department of the City did not receive
the aforesaid letter,
it only became aware of the sale in execution shortly before the sale
date. That is why the City only
attempted to place a reserve
price on the sale in execution per email addressed to the Sheriff the
day before the sale in execution
(9 September 2015). The
Sheriff is further accused of having failed to comply with her duty
to satisfy herself with the notice
required for a reserve price and
to ensure that the municipal debt is paid from the proceeds of the
sale in execution.
[15]
The
City thereafter attempted to receive satisfaction for its claim from
the proceeds realized at the sale in execution, without
success. To
this end it addressed several letters to the transferring attorneys.
[16]
The City submitted that, due to the current
difficulties with the registered post procedures in the country, the
procedure prescribed
in Uniform Rule 46(5)
[7]
(which requires that the local authority must be notified in writing
which notice must be served by registered post) is wholly
inadequate.
The City states that as a result thereof, Sheriffs were
formally requested by the City to notify attorneys of
prospective
sales in execution. This letter is, however, not attached to
the founding affidavit. The City, however,
correctly submits
that the purpose of Uniform Rule 46(5)(a) is to ensure that a local
authority within whose jurisdiction a sale
in execution if taking
place, is informed of a proposed sale by a judgment creditor.
[17]
In
its founding affidavit, the City also states that the time frames
within which a notification of the sale in execution must be
effected
results in the Sheriff not incorporating the municipal debt and the
reserve price in the sale of execution. The
Sheriff would have
none of this. According to her, if the City is unable to set a
reserve price in accordance with Uniform
Rule 46(5) due to the
alleged short “window period” within which to collect the
required information, then there is
nothing precluding the City to
send a representative to the sale in order to look after the City’s
interests. According
to her, it is her function “to
observe the rules and not go beyond it”. The Sheriff
further maintains that she
has, at all times, set the reserve price
where the local authorities, including the City, and preferent
creditors have set such
reserve in accordance with the provisions of
Rule 46(5). She further states that the City has the tendency
to advise Sheriffs
(including herself) of the historical debt due
under section 118(3) of the Systems Act, either the day before or on
the day of
the sale in execution of such property. She contends
that this is not in accordance with the provision of Uniform Rule
46(5)
and cannot be accepted as a reserve price for such property.
She, however, reiterates that, in such circumstances, she
complied
with her obligations under the Auction Regulations of the
Consumer Protection Act and informed potential purchaser of the
potential
charge on the property.
[18]
Although
conceding that there were problems with the registered post
procedures in 2014, the Sheriff disputes that this was still
the case
when the registered letter was dispatched to the City. In turn
the Sheriff blames the City for the inadequacies
in the system due to
the fact that the City does not have an internal system or
infrastructure whereby registered notices received
in terms of
Uniform Rule 46(5) are processed either timeously or at all.
[19]
In
response to the alleged instruction given to Sheriffs (which letter
is not attached to the founding affidavit), she attaches
the letter
received from the City to her answering affidavit. According to
the Sheriff, she was requested by the City’s
attorney (mandated
to collect amounts owed to it) to provide them (the attorneys) with a
detailed list of properties that have
been attached and/or will be
sold 20 days prior to the sale. She reiterates that this
request is not in accordance with the
Rules and that she merely
regarded this letter as a “gentleman’s agreement”.
She further states that there
is no provision in Uniform Rule
46 requiring a Sheriff to do so and that this request is merely an
attempt by the City to impose
an additional obligation on Sheriffs in
order to facilitate its (the City’s) collection of debts.
[20]
The
Sheriff acknowledges that the main purpose of Rule 46(5) is to inform
the local authority and preferent creditors of the impending
sale in
execution and to afford them the opportunity to set a reserve price.
She however, disputes that such an obligation is imposed
on the
Sheriff: The obligation is imposed on the execution creditor.
Further, according to the Sheriff, the only obligation imposed
on the
Sheriff in terms of section 46(5) is to ensure that the execution
creditor has dispatched the notice by registered post
to the local
authority and to the preferent creditor. She specifically disputes
that the Rules impose an obligation on the Sheriff
to ensure that it
has reached the correct branch of the post office and that the post
office sent the City notification of the
registered post item.
Uniform
Rule 46(5) as read with Rules 4 and 4A:
[21]
Uniform Rule 46(7)(a) requires the Sheriff
to fix a date and place for the sale in execution. Once this
date has been set,
the execution creditor must send the preferent
creditors a notice in terms of Uniform Rule 46(5). The purpose
of Uniform
Rule 46(5) is, as already pointed out, to provide the
preferent creditors, including the City, of notice of the forthcoming
sale
in execution and through this notice invite the preferent
creditor to place a reasonable reserve price in order to protect its
rights.
[22]
Uniform Rule 4 requires service to be
affected upon specific and senior office bearers of a local
authority.
[8]
Rule 4A provides that service may be affected by registered post to
the postal address provided.
[9]
[23]
In Erasmus’ commentary on Rule 4 the
following is stated:
“
Any process of the court directed to the
sheriff.’ The following are processes directed to the sheriff:
a summons for provisional
sentence (Form 3), a writ of arrest (Form
4), a simple summons (Form 9), a combined sum ons (Form 10), a
subpoena (Form 16), a
writ of execution (Form 18, Form A, Form B), a
writ of attachment — immovable property (Form 20), a writ of
commitment for
contempt of court (Form F), a writ of attachment ad
fundandam jurisdictionem (Form H).
Service of all subsequent documents and
notices, not falling under subrule (1)(a), in any proceedings on any
other party to the
litigation may be effected in any manner laid down
by rule 4A.”
[10]
[24]
In terms of these Rules, there is only an
obligation to serve on a specific municipal official when the Sheriff
is called upon to
serve a closed list of court process. The
noticed referred to in Rule 46(5)(b) is not such a court process. It
may be sent
by registered post by the execution creditor to the
address of the City. There is no special requirement that it
needs to
be served on a specific official.
[25]
Even if
such an obligation existed, it would be an obligation on the
execution creditor and not the Sheriff. If an execution
creditor fails in meeting such an obligation, there is no rule which
creates a duty on the Sheriff to rectify the situation.
[26]
The Sheriff may only proceed with the sale
if she is satisfied as duly required in terms of Uniform Rule
46(5)(b).
[27]
The Sheriff is therefore required in terms
of the Rules to satisfy herself that: (i) the letter is addressed to
the correct recipient;
(ii) the correct address was reflected on the
letter; and (iii) the letter and the date of postage complies with
the time lines
set out in rule 46 as this would ensure substantive
compliance with the aim of the rule (to inform the preferent
creditors before
drafting the notice of sale and conditions of sale).
Did the sheriff comply with her duties in terms of the uniform
rules?
[28]
Yes, she did. On 13 August 2015, the
attorneys acting on behalf of the execution creditor (Business
Partners) sent a letter by registered
post to the Johannesburg
Metropolitan Municipality giving notice to council of the intended
sale in execution of the Ferndale property
on 10 September 2015.
[29]
In the notice, the City is requested to
stipulate within 10 days of receipt of the notice a reasonable
reserve price, or alternatively,
to furnish its written consent to
the proposed sale without a reserve price. As already pointed out, it
is not, as contended by
the applicant, necessary to address his
letter to the Municipal Manager or the Executive Mayor.
[30]
Uniform Rule 46(8)(a)(i) (of the old Rules
which were applicable at the time) required the following:
“
Rule 46(8)(a)(i) The conditions of sale
shall, not less than 20
[11]
days prior to the date of the sale, be prepared by the execution
creditor corresponding substantially with Form 21 of the First
Schedule, and the said conditions shall be submitted to the sheriff
conducting the sale to settle them.
(b) Any interested party may, not less than 10 days prior to the
date of the sale, upon twenty-four hours’ notice to the
execution
creditor and the bondholders apply to the magistrate of the
district in which the property is to be sold for any modification of
the conditions of sale and the magistrate may make such order
thereon, including an order as to costs, as to him may seem meet.”
[31]
The City therefore had sufficient time to
inform the execution creditor that it wanted a reserve price to be
put in place. It failed
to do so timeously or at all since it
contacted the Sheriff on the incorrect email address only a day
before the sale. The last
day it could have asked for the reserve
price would have been 27
August
2015, which was ten court days before the sale. Therefore, it would
have had enough time to approach a magistrate to alter
the conditions
of sale. The Applicant failed to so.
[32]
It is clear from the papers that the City
must in fact have received the aforesaid letter. This is so because
on 9 September 2015
the City addressed a letter to the Sheriff
setting a reserve price.
[33]
In the event, the City has not made out a
case for the substantive relief it sought.
[34]
Is there, in light of the aforegoing, any
reason to entertain the declaratory relief sought by the City in the
only remaining prayer
(prayer 6)?
[35]
I reiterate what I have already stated in
respect of relief sought in terms of the now abandoned prayer 4 (in
terms of the section
118 (3) of the Systems Act). In light of the
fact that it is this Court’s finding that the Sheriff has
complied with her
duties in terms of the Uniform Rules, there exists,
in my view, no reason why this Court should entertain a difference of
opinion
regarding the interpretation of a Rule that has now become
“
merely abstract, academic or hypothetical”.
[12]
The application therefore falls to be dismissed.
Costs should follow the result.
Order:
[36]
The application is dismissed with costs.
Such costs to be taxed on an attorney and client scale.
AC BASSON
JUDGE OF THE HIGH COURT
Appearances
For
the applicant:
ADV
LGF PUTTER SC
ADV H VARNEY
Instructed by:
MATHIPANE TSEBANE ATTORNEYS
C/O VAN ZYL LE ROUX INC
For
the first respondent:
ADV MARK
OPPENHEIMER
Instructed by:
J TARICA ATTORNEYS
C/O FRIEDLAND HART SOLOMON & NICOLSON
[1]
Act 32 of 2000.
[2]
Act 90 of 1983.
[3]
The
absence
of a live dispute does not as an inflexible rule oust a court’s
discretion to entertain an application for a declaratory
order.
However, this is one of the factors that a Court will consider
together with various other factors before deciding to
exercise a
discretion whether or not to grant declaratory relief. The Court in
Minister
of Finance v Oakbay Investments (Pty) Ltd and others
2018
(3) SA 515
(GP) explains:
“
[59] Herbstein
& Van Winsen
extrapolates
from decided cases factors courts have taken into account to
determine whether judicial discretion should be exercised
positively
or negatively in an application for declaratory relief. These
include (i) the existence or absence of a dispute; (ii)
the utility
of the declaratory relief and whether, if granted, it will settle
the question in issue between the parties;
(iii) whether a tangible
and justifiable advantage in relation to the applicant's position
appears to flow from the grant of
the order sought; (iv)
considerations of public policy, justice and convenience; (v) the
practical significance of the order;
and (vi) the availability of
other remedies.
[60] The above
factors are considered below in no particular order. When applying
the above factors to the present application,
this court is not
persuaded that the circumstances of the present application warrant
the granting of the declaratory relief
sought
.
”
[4]
[1996] ZACC 23
;
1997
(3) SA 514
(CC) at para
[15]
.
[5]
The so-called Windsor transaction will not be considered as it is,
by the applicant’s own admission not directly related
to this
application.
[6]
Act 68 of 2008.
[7]
Quoted in para [8]
supra
.
[8]
Rule
4(1)(a)(viii): “
where a local
authority or statutory body is to be served, service shall be
effected by delivering a copy to the town clerk or
assistant town
clerk or mayor of such local authority or to the secretary or
similar officer or member of the board or committee
of such body, or
in any manner provided by law.
”
[9]
Rule
4A reads: “
(1) service of all
subsequent documents and notices, not falling under rule 4(1)(a) in
any proceedings on any other party to the
litigation may be affected
by one or more of the following manners to the address or addresses
provided by the party under rules
6(5)(b), 6(5)(d)(i), 17(3), 19(3)
or 34(8), by -
(a) hand at the physical address for service
provided, or
(b) registers post to the postal address
provided, or facsimile or electronic mail to the respective address
provided.
”
[10]
RS 4,
2017, D1-30A.
[11]
The old Rule has now been amended to extend the
timelines for the preparation and setting of the conditions of sale
by the execution
creditor from 20 days to 35 days before the date of
sale.
[12]
JT
Publishing (Pty) Ltd v Minister of Safety and Security
above
footnote 1.