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[2014] ZAFSHC 97
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Vkb Landbou Limited v Uys N.O. and Others (2573/2014) [2014] ZAFSHC 97 (19 June 2014)
FREE
STATE
HIGH COURT,
BLOEMFONTEIN
REPUBLIC
OF SOUTH AFRICA
Case No. : 2573/2014
In
the matter between:-
VKB
LANDBOU
LIMITED
.....................................................................................................
Applicant
and
NICOLAAS
PETRUS UYS
N.O
...................................................................................
First Respondent
STEPHANUS
SOLOMON WEYERS
N.O
.............................................................
Second Respondent
NICOLAAS
PETRUS UYS
…....................................................................................
Third Respondent
COENRAAD
HENDRIK VAN DEN BERG
….......................................................
Fourth Respondent
HEARD
ON:
13 JUNE 2014
JUDGMENT
BY:
KRUGER, J
DELIVERED
ON:
19 JUNE 2014
[1]
The matter came before me as an urgent application on Saturday
morning, 7 June 2014. It concerns two farms in the district
of
Vredefort over which applicant holds a bond and the fourth
respondent, C H van den Berg is the lessee and the N & J Trust
the mortgagee and lessor. On Friday 6 June 2014 Keith Francis
Ward, who purchased the farms on a private auction on 16 April
2914,
and who is also the owner of the farm adjacent to the farms sold, saw
the third respondent transporting a large number of
workers to the
farms who were harvesting the crops on the farms. I granted a
rule nisi
prohibiting the third and fourth respondent to harvest the crops with
return day 19 June 2014. The fourth respondent filed
an
answering affidavit and anticipated the return date under Rule 6(8)
to 7 June 2014. The applicant filed a replying affidavit
on 12
June, and I heard the matter on 13 June 2014.
[2]
The applicant cited only the third and fourth respondents in this
application, but the names of the first and second respondents
are
mentioned in the heading to avoid confusion. The respondents
are described as the third and fourth respondents. There
has
been previous litigation between the parties involving the farms
which are the subject of this application. The first
and second
respondents have in previous litigation been the two trustees of the
N & J Trust which is the owner of the farms
in question and the
mortgagor in respect of the applicant, who is the mortgagee, having
advanced monies to the trust. The
competing rights of the
applicant as bondholder and the fourth respondent as lessee comprise
the dispute in this case.
[3]
The case has a long history. On 23 March 2010 the applicant
granted a covering bond to the N & J Trust over the farms
Shaftfontein 726 and Bellary 724, district of Vredefort for R6
million. The trustees of the N & J Trust were Nicolaas Petrus
Uys
and Stephanus Solomon Weyers. The trust defaulted in the
repayment of the bond and applicant brought an application in
this
court for payment. The applicant and the two trustees entered
into a settlement agreement on 13 February 2013 in terms
whereof the
trustees undertook to pay the outstanding debt of R6 738 968,52 plus
interest before 31 March 2013. The settlement
agreement
provided that if the trust defaulted in payment the full balance
would immediately be payable, and judgment for the debt
could
immediately be granted and that the farms would be declared
executable immediately. Clauses 2.3 and 2.4 of the settlement
agreement are important and provide that in the event of default:
“
2.3
dat Applikant die onroerende eiendomme hierbo na verwys onmiddellik
ooreenkomstig die bepalings van die Verbandakte sal verkoop
welke
onder andere sal insluit dat dit per privaatveiling verkoop word ter
delging of gedeeltelike delging van die Skuld;
2.4
die Trust bevestig dat die verkoping van die gemelde onroerende
eiendomme geensins inbreuk sal maak op sy regte onder andere
kragtens
Artikel 26 van die Grondwet 108 van 1996 en of enige ander
verblyfregte van watter aard ookal nie;”
On
14 February 2013 that settlement agreement was made an order of
court.
[4]
The trust defaulted on the order and the registrar granted judgment
on 22 May 2013, declaring the property executable.
Paragraph
6 of the registrar’s order reads:
“
6.
Dat die Applikant die bovermelde onroerende eiendom onmidellik
ooreenkomstig die bepalings van die verbandakte sal verkoop, welke
onder andere sal insluit dat dit per privaat veiling verkoop sal word
ter deling van/of gedeeltelike delging van die skuld”.
[5]
An auction was arranged in terms of the judgement. The Trust
and the third respondent applied to have the auction stayed.
Applicant lodged a counter application for confirmation of the
judgment and leave to sell the farms. On 18 June 2013
the court
gave a judgment in terms whereof the trustees were ordered to pay the
outstanding debt to the applicant before 31 August
2013, and the
farms were again declared specially executable, but the right of the
applicant to hold an auction was suspended until
31 August 2013.
Paragraph 8 of the judgment provided as follows:
“
8
The first respondent [VKB] shall be entitled to re-advertise the
aforesaid trust properties for sale in execution of this judgment
either by public or private auction in terms of the covering bond
1815/2010 at any time after 31 August 2013, should the first
and the
second applicants still be in default.”
The
two trustees and the third respondent applied for leave to appeal,
which application was dismissed with a special costs order
on 5
December 2013.
[6]
The properties were sold on 16 April 2014 on a private auction.
Clause 10.1 of the special conditions of
sale provides:
“
10.1
Die koopsaak sluit in ongeveer 286 hektaar aangeplante mielies. Die
Koper sal slegs geregtig wees om met die mielies te handel
sodra die
kooppprys betaal en/of versekureer is ooreenkomstig klousule 3
hiervan.”
[7]
The applicant attaches to the founding affidavit a writ of execution
issued by the registrar of this court on 21 May 2014 (a
month after
the sale) authorising the sheriff to attach the farms and sell them
in execution on a public auction. In the
answering affidavit
the fourth respondent says that it is difficult to understand this
procedural step by the applicant, because
at that stage the applicant
had already sold the properties by means of a private auction. In the
replying affidavit the applicant
says the private auction did not
exclude any attachment in execution by any judgment creditor,
including the applicant. In argument
counsel did not make much of
this warrant, save that Mr Grobler, for the fourth respondent pointed
out that the warrant dated 21
May 2014 refers specifically to a
public auction. The warrant follows the wording of the Rules of
Court and in particular
with reference to Rule 46, dealing with sales
in execution.
[8]
The lease agreement on which the fourth respondent relies was entered
into on 1 September 2012 between the trustees of the N
& J Trust
and the fourth respondent. It was a four year lease running
from 1 September 2012 to 31 August 2016. The
bond on which
applicant relies was registered on 23 March 2010. On 22 May
2013 the registrar granted judgment on the bond
and declared the
property executable and directed that the property could be sold by
private auction. On 18 June 2013 the
trust applied for an order
staying the sale in execution, and the court directed that the
putting into operation of the judgment
was stayed until 31 August
2013. The farms were again declared specially executable, and
the applicant was authorised to
sell them by public or private
auction if the full debt was not paid by 31 August 2013.
[9]
The main contention advanced by Mr Grobler on behalf of the fourth
respondent is that the properties could not legally have
been sold
sans
the
lease agreement because the sale amounted to a private contract. The
fourth respondent’s case is that the sale
was not a sale in
execution, and therefore the rule
qui
prior est in tempore potior est in jure
does not apply. As authority for this proposition Mr Grobler
relies on
Syfrets Bank Ltd and Others
v Sheriff of the Supreme Court, Durban Central, and Another, Schoerie
NO v Syfrets Bank Ltd and Others
1997 (1) SA 764
(D). In the
Syfrets
case it was common cause that the sale in execution took place
pursuant to Rule 46(10). Combrink J points out that under
that
Rule immovable property attached in execution must be sold by public
auction. The learned judge (at 770 I – 771
A) says that
Rule 46(10) uses the phrase public auction as meaning the type of
auction well known in our common law. The
Syfrets
case dealt with the effect of the winding up of a company on property
attached and sold in execution by the sheriff before the
winding-up.
[10]
Mr Grobler also refers to
Absa Bank
Ltd v Universal Pulse Trading Figures 45 (Pty) Ltd and Others
2011 (5) SA 80
(WCC). In that case Absa wanted cancel a sale in
execution of immovable property by the sheriff. Absa had
instituted
action against the first and second respondents and
obtained judgment and an order declaring the properties executable.
The
sheriff arranged a sale in execution. Unbeknown to
the sheriff Absa entered into a private sale with the fifth
respondent.
The sheriff’s sale in execution proceeded.
After bidding had started, a representative of Absa requested
him
to cancel the sale, which the sheriff refused to do because
bidding had already started. The sheriff sold the property to
the fourth respondent. Absa now requested the court to review
and set aside the actions of the sheriff in so selling the
property.
The court concluded that when the sheriff sells the property in
execution he does not act as agent of the judgment
creditor but does
so as an executive of the law (at par [8] with reference to the
Syfrets
case). The court concluded that after bidding had started, it
was no longer open to the sheriff to stop the sale (par [16]).
The
Absa
case, as well as the
Syfrets
case concerned the nature of a sale in execution by the sheriff. In
this case the parties agreed and the court ordered that
the sale
could take place by private or public auction. Mr Pretorius
informed me that a public sale is one held by the sheriff.
A
private auction is where the creditor arranges the sale. It is
not in dispute that in this case a private auction
was held. There
is no merit in Mr Grobler’s reliance on Rule 46 for the
proportion that sales in execution have to
be held by public
auction. In this case the court ordered that the sale could be
done by way of private auction.
[11]
The case relied on by Mr Pretorius,
Lubbe
v Volkskas Bpk
1991 (1) SA 398
(O)
concerned a situation where the court (at 409 A-B) confirmed the
principle that a later contract of lease cannot prejudice
the rights
of a bondholder. Smuts JP points out that if that were to
happen, there would be extremely detrimental effects
for investors,
if fixed property could, after registration of a bond, be encumbered
by a lease or a
ius retentionis
.
That is the present situation. The applicant’s mortgage
bond cannot be prejudiced by the later lease of the
fourth
respondent. In
United Building
Society Ltd and Another NO v Du Plessis
1990 (3) SA 75
(W) at 80 E – F the court held that a lease that
came into being on a date after the registration of the mortgage
bond, is
a real right which ranks after a montage bond, and it
cannot prejudice the rights of the mortgagee. The fact that the
applicant
chose to realise payment under its mortgage bond by a
private sale, as authorised by the court, cannot alter the nature of
the
real right it was enforcing.
[12]
Mr Grobler’s main contention is that because it was not a
public auction, the sale was merely an execution of the creditor’s
personal rights, and one is not dealing with competing real rights.
It is an ingenious argument. The fact is that both
the
rights of a bondholder and those of a tenant are real rights. They
operate on the footing of publicity. Because
the bondholder’s
rights are registered in the deeds office, the fiction applies that
everyone is aware of them. In
this case it is no secret that
the fourth respondent knew about the bond because the trust was taken
to court on the bond already
in May 2013. In his answering
affidavit the fourth respondent explains that he was present at the
auction and he explains
how the property was first put up for sale
subject to the lease, and when no suitable offer was received, it was
then offered without
the lease. Execution was done in terms of
a court order, not at the whim of the creditor. The enforcement
of the real
right, the bond, can take place by means of a public
auction and also by a private auction (or possibly other means) if
the parties
so agree and, as was an additional step in this case, the
court directed that a private sale was competent to enforce the
applicant’s
rights. The nature of applicant’s right
is not determined by the nature of the realisation of that right. A
right
under a mortgage bond is a real right. The fact that the
court gave authority that the right could be realised by a private
sale, does not alter the nature of that right. It remains a
real right, and is stronger than another real right, the lease,
which
came into being later than the registration of the mortgage bond.
[13]
There is no merit in the opposition of the fourth respondent. The
actions of the fourth respondent, by starting to harvest
he crops
late on a Friday afternoon, at a time before the moisture content of
the crops was ideal for harvesting, points to the
fact that the
fourth respondent was attempting to gain an advantage to which he is
not entitled. The fourth respondent may
have a claim against
the lessor, but there is no such claim before me now. The
applicant sold the property and the crop,
it is expressly so stated
in the conditions of sale. The
rule nisi
should be
confirmed with costs.
ORDER
1.
The
rule nisi
granted on 7 June 2014 is confirmed and the fourth respondent is
directed to pay the costs of this application.
_____________
A. KRUGER, J
On
behalf of applicant: Adv J.J. Pretorius
Instructed
by:
Christo Dippenaar
Attorneys
BLOEMFONTEIN
On
behalf of 4
th
respondent: Adv S. Grobler
Instructed
by:
Rossouws Attorneys
BLOEMFONTEIN