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[2019] ZAFSHC 219
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Hancock and Another v Nedbank Limited and Others (905/2018) [2019] ZAFSHC 219 (14 November 2019)
IN
THE HIGH COURT OF SOUTH AFRICA,
FREE
STATE DIVISION, BLOEMFONTEIN
Case
number
: 905/2018
In
the matter between:
D.C.G.
HANCOCK
1
st
Applicant
T.E.
HANCOCK
2
nd
Applicant
and
NEDBANK
LIMITED
1
st
Respondent
TRADESHACK 120
CC
2
nd
Respondent
THE SHERIFF,
BETHLEHEM
3
rd
Respondent
THE REGISTRAR OF
DEEDS
4
th
Respondent
HEARD
ON
: 31 OCTOBER 2019
JUDGMENT
BY
: LOUBSER, J
DELIVERED
ON
: 14 NOVEMBER 2019
[1]
This is an application concerning the provisions of Rule 46A of the
Uniform Court Rules, and more particularly the provisions
of subrule
(9)(c), (d) and (e) thereof. The application was filed after an
immovable property belonging to the Applicants was auctioned
in
execution by the Sheriff of Bethlehem, at which auction the highest
bid received was well below the reserve price fixed by the
Court. The
facts of the matter, and what transpired after the auction, are more
fully set out hereinafter.
[2]
On 17 January 2019 the immovable property in question was declared
specially executable by the Court, and a reserve price of
R 3 million
for the auction was set by the Court in terms of Rule 46A(8)(e). The
Applicants are an elderly couple married in community
of property. In
their Founding Affidavit, they described the property as Portion 1 of
the farm De Molen in the district of Bethlehem.
They further state
that the property is their primary residence, and that they have
always gained an income from a guesthouse they
conduct on the farm.
In the First Respondent’s application to have the property
declared specially executable, it was mentioned
that the property was
valued at R 6 million by the First Respondent prior to the
application.
[3]
The auction took place on 27 August 2019 at the premises of the
Sheriff in Bethlehem. The highest bid received was that of the
Second
Respondent for an amount of R 2.2 million, which
was R 800 000-00 below the reserve price set by
the Court.
According to the First Applicant, he was subsequently informed by the
attorney acting for the First Respondent (Nedbank)
that an
application would have to be made to the High Court for further
directions in terms of the Court to Rules, and that he
would be
informed when such an application would be heard. In the meantime,
and while awaiting the date of the application in the
High Court, the
First Applicant himself began to search for a purchaser for value,
and he found one who offered to buy the property
for R 5.380 million.
On 20 September 2019 at approximately 8:15 in the morning the First
Applicant’s attorney telephonically
informed the attorney for
Nedbank of such offer, and on 23 September 2019 the signed
offer to purchase was delivered to the
attorney of Nedbank. The offer
was to purchase for cash, and by 30 September 2019 the whole purchase
price of R 5.380 million was
already paid into the trust account of
the first Applicant’s attorney.
[4]
On the same day that the new offer was conveyed to the attorney of
Nedbank, namely 20 September 2019, a report submitted by
the Sheriff
in terms of Rule 46A(9)(d), was considered by a Judge in Chambers and
an Order of Court was subsequently made on the
same day. None of the
parties were aware that such report would be considered on that
particular day. I will return later to the
order that was made by the
Judge in Chambers.
[5]
At this juncture, I deem it appropriate to refer to the relevant
provisions of Rule 46A, to the report of the Sheriff and to
the order
that was made by the Judge in Chambers. It is necessary to do so in
order to put the above-mentioned events into perspective.
Rule
46A(9)(c) provides as follows:
“
(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.”
This
subrule is couched in mandatory terms, and the court must order how
execution is to proceed where the reserve price was not
achieved.
[6]
Rule 46A(9)(d) reads as follows:
“
(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
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)”
[7]
The provisions of Rule 46A(9)(e) are stated as follows:
“
(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.”
In
terms of this subrule, the Court has a discretion to either order
that the property be sold to the person who made the highest
bid, or
to order that the property not to be sold to that person.
[8]
Subsequent to the auction on 27 August 2019, the Sheriff submitted
the required report to the Registrar of the High Court, Bloemfontein.
The report is dated the same day, namely 27 August 2019. Although the
report is also addressed to the Applicant, to the Second
Respondent
as purchaser below reserve and to Nedbank, there is no indication on
the papers that any of them ever received the report.
The information
required by the rule are contained in the report, and the first
unnumbered paragraph of the report states the following:
“
Please
take notice that the Sheriff of Bethlehem presents his report in
terms of Rule 46A(9)(d) and request that a judge in chambers
make an
order in terms of the said rule on a sale that took place on 27
August 2019 at 12:00 at the Sheriff’s sale room at
Sheriff
Bethlehem, 5 Lindley St., Bethlehem on the immovable property
described as Portion 1 of the Farm De Molen 1808, district
Bethlehem,
Free State Province. I confirm that the bid made was R 2 200 000-00.
Buyer name: Tradeshack 120 CC (Denise
Thompson)”
[9]
It appears to be common cause between the parties that this report
contained the only information that was placed before the
Judge in
Chambers. To put it differently, the news about the new offer was
never conveyed to the Judge at the time that she had
to decide the
matter. This is probably so because nobody had bothered to inform the
Sheriff immediately when the new offer was
negotiated. Had the
Sheriff been informed, he would surely have brought the new
developments to the attention of the Judge before
the determination
was made. For this sad state of affairs the attorneys for the
Applicants and for Nedbank have to carry the blame,
for they should
have known that the Sheriff had to submit his report to the High
Courts within 5 days of the date of the auction,
and that a decision
by the Judge in Chambers could follow at any time thereafter. This
brings me to the order made by the Judge
on the information presented
in the Sheriff’s report.
[10]
I quote the whole order made by the Judge verbatim as follows:
“
Having
considered the Notice of Motion and the other documents filed of
record, and having heard Counsel for Applicants, it is ordered
that:
1.
The Application is granted in
terms of Section 46A(9)(d) in terms of prayer 1.
By
Order of this Court.”
The
parties were
ad idem
at the hearing of the application before
me that this Court Order presented with a number of difficulties. In
the first place,
there was no application before the Judge in
Chambers, nor was there any Notice of Motion which had to be
considered. It is further
common cause that no counsel for the
Applicant appeared before the Judge in Chambers when the matter had
to be determined. The
Judge only had the Sheriff’s report on
the table and nothing else.
[11]
As mentioned already, there was no application that could be granted
in terms of Section 46A(9)(d). If the Judge had intended
to refer to
that Rule, then the order made is still difficult to understand,
because the said Rule only provides that the Sheriff
must submit a
report containing certain information. As we have seen earlier, it
was only in terms of Rule 46A(9)(c) and (e) that
the Judge could make
any order. The phrase “in terms of prayer 1” presents a
further difficulty. There were no documents
before the Judge
containing a prayer 1. The paragraphs in the report by the Sheriff
were not numbered at all, and if the Judge
had actually intended to
refer to the first paragraph of the report, the reference to prayer 1
still provides no clarity. This
is so because the Sheriff only
requested in his first paragraph that a judge in chambers make an
order in terms of the Rule.
[12]
It is no wonder that this Court Order spurred the parties into action
without any further ado. The Applicants filed an application
seeking,
inter alia, a declarator that the Court Order of 20 September 2019
does not constitute a direction that the sale of the
property for
less than the reserve price be accepted and condoned. In the
alternative, they pray that the Court Order be rescinded
and set
aside, and that the matter be set down again for determination, this
time with notice to the Applicant, and probably the
other interested
parties as well. The Second Respondent opposed this application as
could be expected, and simultaneously with
its answering affidavit,
filed a counter application seeking an order to the effect that the
Order granted by the Judge in Chambers
be varied in terms of Rule
42(1)(b) and be substituted with an order confirming that the Sheriff
may proceed to sell the property
to the highest bidder in the amount
of R 2 200 000-00.
[13]
This Court is now called upon to decide the application of the
Applicant and the counter application filed by the Second Respondent.
The Sheriff and the Registrar of Deeds have not filed any papers in
the applications, while the First Respondent (Nedbank) has
filed a
Notice to Abide by the decision of the Court.
[14]
To begin with the counter-application, Rule 42(1)(b) provides that
the court may rescind or vary an order or judgment in which
there is
an ambiguity, or a patent error or omission, but only to the extent
of such ambiguity, error or omission. The general
approach appears to
be that the sense and the substance of the order must not be altered
when a variation of the order is granted
[1]
.
Mr. Van der Merwe, appearing for the Second Respondent, urged the
Court to interpret the order made in chambers to mean that the
property is to be sold to the Second Respondent, and that the order
should therefore be varied to reflect that intention more clearly.
[15]
I do not agree. If the Judge in Chambers had that intention in mind,
the Judge could have said so when the order was made.
On a proper
construction of the terms of the order, it cannot be said by any
stretch of the imagination that it was meant to convey
the message
that the property was to be sold to the Second Respondent. The
variation sought by the Second Respondent would therefore
alter the
sense and the substance of the order, which is not allowed. Such a
variation would completely substitute the order with
something
different, to put it differently.
[16]
To my mind, the only reasonable conclusion in the circumstances would
be that the Judge in Chambers had not made any order
or determination
in terms of Rule 46A(9)(c) or (e) at all. This becomes even more
apparent when regard is had to the Court Order
of Daffue, J on 17
January 2019 when he declared the property specially executable. He
made an additional order that if the reserve
price of R 3 million is
not achieved at the sale in execution, the Court must, on a
reconsideration of the factors in Rule 46A(9)(b)
and its powers under
this Rule, order how execution is to proceed. It speaks for itself
that this was not done.
[17]
It is therefore now incumbent upon this Court to consider the facts
before it and to make an order in terms of Rule 46A(9)(c)
and (e) in
the absence of any prior court order in terms of these sub-rules. Mr.
Van der Merwe has urged the Court that, if such
an approach is
adopted, it should not consider the offer that was received a day or
two later after the Judge in Chambers had dealt
with the matter. This
Court should then consider the matter only on the same information
that was available on 20 September 2019,
the argument went. The offer
of R 5.380 million should therefore be ignored if the matter is
reconsidered.
[18]
This argument is also without any substance. Rule 46A(9)(e) provides
clearly that the court may, after considering the information
in the
Sheriff’s report and any other relevant factor, order that the
property be sold to the person who made the highest
offer or bid. The
fact that R 5.380 million was offered after the auction and paid into
the trust account of the Applicant’s
attorney is no doubt a
fact that falls under “any other relevant factor”. This
Court is entitled to take that offer
into account.
[19]
Since all the interested parties are presently before the court, and
since the parties have submitted all the facts and the
arguments to
this Court to advance their respective cases, common sense and the
interest of justice demand that this Court now
bring finality to the
issues in question without any further delay.
[20]
There can be no doubt that the offer of R 5.380 million should
prevail. The offer of R 2.2 million made by the Second Respondent
is
far below the reserve price set by the Court, and there is no reason
why such offer should be preferred to the much higher offer
that was
later received. The counter-application filed by the Second
Respondent can therefore not succeed. On the other hand, the
Applicants have made out a proper case for the relief they seek.
[21]
Although it was already found that the Judge in Chambers had made no
order as envisaged by the Rule, that order should be rescinded
in any
event for the sake of clarity. As for costs, I deem it inappropriate
in the special circumstances of this case to make any
order of costs
at all.
[22]
The following order is made:
1.
The main application succeeds.
2.
The Court Order in this matter dated 20
September 2019 is rescinded and set aside.
3.
In terms of Uniform Court Rule
46A(9)(c), it is ordered that the property, Portion 1 of the farm De
Molen 1808, District of Bethlehem,
be sold to the person who made the
highest offer of R 5.380 million for the property on 23 September
2019.
4.
The counter-application is dismissed.
5.
There is no order of costs.
_________________
P.J.
LOUBSER, J
For
the Applicants: Adv. S.J Reinders
Instructed
by: Marinda Bender Attorney Inc.
c/o
Pieter Skein Attorneys
Bloemfontein
For
the First Respondent: Adv. R. Van der Merwe
Instructed
by: Badenhorst Attorneys
Bloemfontein
[1]
Mostert
NO
v
Old Mutual Life Assurance Co (SA) Ltd.
2002 (1) SA 82
(SCA) at 86
D-E