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[2016] ZAGPPHC 189
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Sheriff of the High Court, Witbank v Wessels; In re: First National Bank, a Division of Firstrand Bank Ltd v Smal and Another (49144/2010) [2016] ZAGPPHC 189 (5 April 2016)
REPUBLIC OF SOUTH AFRICA
IN THE HIGH COURT OF SOUTH AFRICA,
(GAUTENG DIVISION, PRETORIA)
5/4/2016
CASE NO: 49144/2010
Not reportable
Not of interest to other judges
Revised
In the matter between:
THE SHERIFF OF THE HIGH COURT,
WITBANK
Applicant
and
KARIEN PETRU-AMORE
WESSELS
Respondent
In re:
FIRST NATIONAL BANK, A DIVISION OF
FIRSTRAND BANK
LIMITED
Plaintiff
and
BAREND JACOBUS
SMAL
First
Defendant
KAREN LYNETTE
SMAL
Second
Defendant
JUDGMENT
TEFFO. J:
[1] The applicant seeks an order in
terms of Uniform rule 46(11) for cancellation of the sale in
execution of the property situated
at Holding 87 Jackaroo
Agricultural Holding Extension 2, Registration Division J, S, The
Province of Mpumalanga measuring 2,1474
(two comma one four seven
four) hectares
(" the property'' ).
He also seeks an
order that the property be put up for sale again. The other relief
sought was that the respondent should be ordered
to pay damages to
the plaintiff, if any, suffered by the plaintiff, which shall be
determined after the property has been sold
and that the costs of the
application and for arranging a new sale in execution should be
deemed to be part of the damages suffered
by the plaintiff, if any.
[2] The property was sold on 2 April
2014 to the respondent in execution of a judgment that was granted in
favour of First National
Bank (the
"bank")
against
Mr and Mrs Smal (the
"defendants").
[3] The bank and the defendants
entered into a written home loan agreement in April 2007 and a
mortgage bond was registered over
the property in favour of the bank
as security for the debt owed to it by the defendants.
[4] The defendants defaulted with
their monthly obligations in terms of the agreement and the bank
issued summons against them for
payment of the amount due and payable
to it together with interest and costs. The defendants did not defend
the action and the
bank obtained judgment by default against them on
2 November 2010. The bank also obtained an order in terms of Rule
46(1) authorising
the registrar of this Court to issue a warrant of
execution against the property in August 2011 after application
thereof. Eventually
a warrant of execution against the property was
issued on 12 October 2011 and the property was sold at a public
auction to the
respondent on 2 April 2014.
[5] The defendants launched an
application in terms of sections 86 and 87 of the National Credit Act
53 of 2005
("the NCA" )
at the Magistrate's Court,
Witbank and a debt restructuring order was granted on 28 June 2013.
[6] On 2 July 2014 the defendants
brought an application in this Court seeking an order setting aside
the warrant of execution obtained
by the bank on 12 October 2011 and
the sale in execution of the property to the respondent.
[7] Both applications were opposed and
were set down on the same day before me in the opposed motion. At the
hearing of the two
applications I was advised that the application by
the defendants had been withdrawn by notice.
[8] Clause 4 of the conditions of sale
reads as follows:
"4.1 The purchaser shall on
completion of the sale, pay
a
deposit of 10% of the purchase
price immediately on demand by the sheriff.
4.2
Payment shall be made in
cash, by bank guaranteed cheque or by way of an electronic transfer,
provided that satisfactory proof of
payment is furnished immediately
on demand to the sheriff.
4.3 Should the purchaser fail to
pay the deposit and the sheriffs commission on completion of sale,
then the sale shall be null
and void and the sheriff may immediately
put the property up for auction again.
4.4 The balance of the purchase
price shall be paid to the sheriff against transfer and shall be
secured by a bank guarantee, to
be approved by the plaintiffs
attorney, which shall be furnished to the sheriff within 21 days
after the date of sale. Should the
purchaser fail to furnish the
sheriff with
a
bank guarantee within
21 days after the
date of sale, the sheriff may in his/her sole discretion grant the
purchaser
a
five day extension within which to provide the
required bank guarantee. Should the purchaser fail to furnish the
sheriff with
a
bank guarantee, which is approved by the
plaintiff s attorney, within the required time, the
sale may
be cancelled."
[9] It is common cause between the
parties that the respondent paid the deposit of 10% of the purchase
price on completion of the
sale and the commission as required in
terms of the conditions of sale referred to above.
[10] It is also common cause between
the parties that the respondent failed to pay the balance of the
purchase price or secure payment
thereof by a bank guarantee to be
approved by the bank's attorneys of record within 21 days of the sale
in execution as required
of her in terms of clause 4.4 of the
conditions of sale.
[11] As a result a letter was sent to
the respondent on 9 June 2014 demanding that she should comply with
clause 4.4 of the conditions
of sale within 5 (five) days of the
letter and also alerting her of clause 8.1 of the conditions of sale.
The respondent failed
to respond to the letter.
[12] Clause 8.1 of the conditions of
sale reads:
"If the purchaser fails to
carry out any of his obligations under these conditions of sale, the
sale may be cancelled by
a
Judge summarily on the report of
the sheriff after due notice to the purchaser, and the property may
again be put up for sale, and
the purchaser shall be responsible for
any loss sustained by reason of his default, which loss may, on the
application of any aggrieved
creditor whose name appears
on
the sheriffs distribution account, be recovered from him under
judgment of the Judge pronounced summarily on
a
written report
by the sheriff, after such purchaser shall have received notice in
writing
that such report will be laid before the Judge for
each purpose, and if he is already in possession of the property, the
sheriff
may, on
7
days' notice, apply to
a
Judge for an
order ejecting him or any person claiming to hold him there from."
[13] The respondent contends that
because of the dispute between the bank and the defendants which
resulted in the defendants launching
an application for the setting
aside of the warrant of execution and the subsequent sale, she could
not finalise the inspection
of the property and make any financial
arrangements. She was accordingly denied access to the property by
the defendants. I will
deal with this aspect later in the judgment.
It was also the respondent's contention prior to the withdrawal of
the application
by the defendants that she was not opposing their
application and that should that application succeed, it would
nullify the sale.
In fact the respondent had wished that the present
application should be postponed to allow the application by the
defendants to
run its course. The respondent has always contended
that should the applicant persist with the hearing of the present
application
prior to the hearing of the application by the
defendants, she should not be held liable for any consequential costs
or damages
as according to her the sale in execution should not have
been arranged. There is no merit in all these contentions as the
application
by the defendants has been withdrawn. It was argued on
behalf of the respondent that the sheriff knew that the guarantees
were
due, that there were problems relating to the property and that
the applicant and the bank should have applied their mind to the
situation prior to arranging the sale in execution. This argument
does not hold any water as no allegations to this effect have
been
made in the respondent's papers.
[14] The respondent does not oppose
the cancellation of the sale. She only challenges the granting of the
ancillary relief which
includes an order that she should be held
liable for damages occasioned by the cancellation of the sale in
execution. It was submitted
on her behalf that the ancillary relief
prayed for by the applicant should be postponed for later
determination. A submission,
which the applicant opposed, was made
that a proper hearing should be held to determine whether the
respondent purchaser should
be held liable for damages occasioned by
the cancellation of the sale. Counsel for the respondent referred the
court to the decision
of
Rae v Sheriff of the High Court Kempton
Park South and Others
[2014] JOL 32413
(GJ) and argued that the
provisions of Rule 46(11) and the conditions of sale are discretional
and not peremptory. In the
Rae
matter the court said the
following:
"'
Neither rule 46(11) nor
clause 10.1 of the conditions of sale obliges the sheriff to cancel
the sale in the event of non-compliance
with any conditions; both the
rule and the condition are expressed permissively.
[15] Reference was made in the Rae
matter above to the case of
Standard Bank of South Africa v Ndlovu
2012 JDR 0524 (GSJ) where Sutherland J dealt with an election by
the sheriff to effect a cancellation in terms of an identical clause
5.1 as follows:
"A purchaser only has those
rights that are to
be
found within the four comers of the sale
agreement. If the guarantees are late, even though the purchaser may
be
blameless, there is no judicial basis on which to challenge
the right of election vested in the sheriff in clause
5.
1 of
the
sale agreement to effect
a
cancellation. In an
ordinary contract
a
provision vesting
a
right to cancel
upon the happening or non happening of
a
specified event
by
a
stipulated date is not susceptible to challenge.
The election is not
a
breach of contract. The mantle of
judicial supervision over
a
sale in execution and its
cancellation does not create more or better rights for the defaulting
purchaser."
[16] Counsel for the applicant
referred me to clauses 6.1 and 6.3 of the conditions of sale and
argued that the purchaser of a property
sold at a sale in execution
purchases the property at his or her own risk. He pointed out that
the respondent had to provide the
guarantee by 23 April 2014 but
failed to do so. The sheriff elected not to condone the late delivery
of guarantees. He further
submitted that the application by the
defendants was only served a month and half days after the respondent
was served with a demand.
Accordingly, so it was argued, that the
respondent was already in breach of the conditions of sale when the
application by the
defendants was launched. It was also contended
that the fact that there was an application by the defendants did not
affect the
execution of the judgment.
[17] Clauses 6.1 and 6.3 read:
"6.1 The property shall be at
the risk and profit of the purchaser after the fall of the hammer and
the signing of the conditions
of sale and payment of the initial
deposit.
6.3 The plaintiff and the sheriff
give no warranty that the purchaser shall be able to obtain personal
and/or vacant occupation
of the property or that the property is
unoccupied and any proceedings to evict the occupier(s) shall be
undertaken by the purchaser
at his/her/its own cost and expense."
[18] The facts in both the
Rae
and
Ndlovu
matters are distinguishable from the present matter. In
the
Rae
matter above Rae, who was the judgment debtor against
whom judgment was granted and as a result of which there was a sale
in execution
of the judgment, sought to challenge the condonation by
the sheriff of the terms and conditions of sale by allowing the late
delivery
of the guarantees by the respondent purchaser of the
property. The court found that because the sheriff had an election
whether
or not to cancel the sale where there was non-compliance with
the conditions of sale, there was nothing that precluded him from
condoning the late delivery of the guarantees by the purchaser of the
property. In the present matter the respondent purchaser
who had not
delivered the guarantees, is not asking for condonation of the late
delivery of the guarantees to enable her to comply
with the
conditions of sale. She agreed that the sale should be cancelled. She
is only contesting that she should be held liable
for the costs or
damages occasioned by the cancellation of the sale. The applicant in
the
Ndlovu
matter sought to rescind a judgment in terms of
Rule 46(11). The application was defective.
[19] The act of the sheriff by
bringing an application in terms of rule 46(11) is not an
'application' contemplated by Rule 6. The
sheriff presents a report.
The judge cancels the sale. The act of the judge in cancelling the
sale in terms of Rule 46(11) is not
a judgment in any conventional
sense. The procedure is
sui generis.
Its function is to
provide judicial oversight to the process of execution of judgment.
The 'cancellation', albeit a decision of
the judge, defies forensic
classification. It is not an approval of the sheriff's act; the judge
per se effects the cancellation,
albeit at the instance of the
sheriff and doubtless, in turn, at the instance of the judgment
debtor. This cancellation is the
precursor to authorising, as
contemplated by the Rule, a resale (see
Standard Bank of South
Africa v Ndlovu
above)
[20] The sheriff's invocation of the
Rule is to offer him the security of being able to re-advertise and
resell without litigation
interfering with the swift progress towards
disposing of the property and of satisfying the creditor's legitimate
interests (see
The sheriff, South Johannesburg Re Sitho/e
&
Others, Case No 1682212002 SGHC (unreported), the Sherif, Hlabisa
and Nongoma v Shobede
2009 (6) SA 272
KZN).
[21] It is not disputed that the
respondent has failed to deliver the guarantees as required in terms
of clause 4.4 of the conditions
of sale within 21 days of the date of
sale.
[22] She was given an extension of 5
days in excess of the 21 days within which to deliver the guarantees
to secure payment of the
purchase price but still failed to do so.
There was absolutely no reason why the respondent when she was
afforded an opportunity
at the time the demand was made, did not
respond and/or explain her situation with regard to her being denied
access to the property.
The respondent's papers are silent as to why
the fact that she was denied access to the property is only mentioned
in the answering
affidavit for the first time. No details as to how
and when that happened, were given. In any event the respondent was
not supposed
to involve herself in the dispute between the bank and
the defendant. The application by the defendants was only to set
aside the
warrant of execution and the sale. Even if it had
succeeded, there was no application for the rescission of the default
judgment
granted in favour of the bank. That judgment still stands. I
am of the view that it was within the bank's rights to proceed to
execute the judgment that was granted in its favour.
[23] Based on the reasons advanced
above I do not find any merit in the contention by the respondent
that the sale in execution
should not have been arranged and that the
bank instructed the sheriff to proceed with the sale in execution of
a property that
had a cloud over it. For the same reasons and the
fact that the procedure in terms of Rule 46(11) is
sui generis
on
its own and its purpose as highlighted in para [19] I am not inclined
to accept the contention by the respondent that an order
can be
granted for the cancellation of the sale in execution provided that
she is not ordered to pay damages and or costs occasioned
by the
cancellation. I do not accept her reasons for failure to comply with
clause 4.4 of the conditions. I also do not see any
point of
postponing the granting of the other prayers as the issues are clear
and straight forward. The approach adopted by the
respondent is not
what is envisaged in the purpose of a Rule 46(11) as articulated in
Ndlovu, the sheriff, South Johannesburg Re
Sithole & Others, and
the sheriff, Hlabisa and Nongoma v Shobede matters above. The
respondent breached the conditions of sale
by failure to provide the
guarantees as required of her in terms of clause 4.4. She had taken
the risk of the property after the
fall of the hammer, the signing of
the conditions of sale and payment of the initial deposit. The
sheriff elected to invoke the
provisions of rule 46(11) for
cancellation of the sale which the respondent is not contesting, to
enable him to re-advertise and
resell the property without delay and
satisfy the bank's legitimate interests. The bank obtained judgment
against the defendants.
That judgment has not been rescinded and
there is no application pending to rescind it currently. It is
entitled to execution of
that judgment.
[24] I am persuaded under the
circumstances that the applicant is entitled to the relief sought.
[25] In the result I make the
following order:
25.1. The sale in execution of the
property situated at: HOLDING 87 JACKAROO AGRICULTURAL HOLDING
EXTENSION 2, REGISTRATION DIVISION
J, S, THE PROVINCE OF MPUMALANGA
MEASURING 2, 1474 (TWO COMMA ONE FOUR SEVEN FOUR) HECTARES HELD BY
DEED OF TRANSFER NO T55484/2007
held by the SHERIFF WITBANK on 2
April 2014 which was purchased by KARIEN PETRU-AMORE WESSELS in
execution of a judgment of the
above Honourable Court granted on 02
NOVEMBER 2010 is hereby cancelled and the property should again be up
for sale.
25.2. The respondent is ordered to pay
damages to the plaintiff, if any, suffered by the plaintiff, which
damages shall be determined
after the property has been resold.
25.3. The costs of this application
and the costs of arranging a new sale of execution are deemed to be
part of the damages suffered
by the plaintiff, if any.
25.4. The respondent should be given
10 days' notice per registered post of the plaintiff's claim for
damages suffered, if any.
25.5. The applicant is authorised to
hold the deposit paid by the respondent in an interest-bearing trust
account, for the benefit
of the respondent, until fulfilment of
prayers 3 and 4 above, and to set off same against plaintiff's
damages, if any.
__________________________
J TEFFO
JUDGE OF THE HIGH COURT OF SOUTH
AFRICA
(GAUTENG DIVISION, PRETORIA)
FOR THE
APPLICANT A
P ELLIS
INSTRUCTED
BY STRAUSS
DALY INCORPORATED
FOR THE
RESPONDENT J
H MOLLENTZE
INSTRUCTED
BY H
J WESSELS ATTORNEYS
DATE OF
JUDGMENT 5
APRIL 2016