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[2011] ZAECELLC 12
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Landlord Properties (Pty) Ltd and Another v Nedbank Ltd and Another (EL39/11, ECD 139/11) [2011] ZAECELLC 12 (15 November 2011)
17
IN THE HIGH COURT
OF SOUTH AFRICA
(EAST LONDON
CIRCUIT LOCAL DIVISION)
CASE NO. EL39/11
ECD 139/11
In the matter
between
LAND LORD
PROPERTIES (PTY) LTD
…................................
First
Applicant
MASIBULELE DONALD
STURU PASIYA
…........................
Second
Applicant
and
NEDBANK LIMITED
…..............................................................
First
Respondent
ALLEN FEW N.O.
…...............................................................
Second
Respondent
JUDGMENT
HARTLE, J:
The first applicant
is the registered owner of certain immovable property described as
Erf 6487 East London, situate at 30 Beatty
Road, Selborne, East
London (“
the
property
”). The first
respondent - having obtained a judgment against both applicants in
this court under case number EL 30/10 –
ECD 130/10 (‘
the
bond action
”) arising from the first applicant’s
indebtedness under a bond, and against the second applicant in his
capacity
as surety on behalf of the first applicant - advised by
notice in the local Daily Dispatch newspaper of its intention to
sell
the property in execution at a sale which was scheduled to be
held on 14 January 2011.
On the morning of
the sale in execution the applicants approached this court on an
urgent basis, without notice to the respondents,
for an order
interdicting and restraining the first respondent from proceeding
with the sale which was due to take place that
morning. The
last-minute intervention was motivated on the basis that if the sale
were to proceed, not only would the second
applicant - who had only
learned of the sale on 5 January 2011 while he was away on holiday
from a friend who saw it in the newspaper
– be prejudiced, but
so too the second respondent, appointed as curator
bonis
pursuant to a restraint order issued out of the Eastern Cape
division of the High Court under case number 2079/2008 on 30 October
2008 (“
the
restraint
order
”) in
terms of the provisions of
section 26
of the
Prevention of Organised
Crime Act, No. 121 of 1998
(“
POCA
”), who had not
been cited as a party in the bond action despite having a
“
substantial interest
” in the subject matter of
that litigation.
The impression was
created that this event - the sale - had come upon the applicants by
sheer surprise. It was alleged in this
regard that the second
applicant had never received the summons which led to the sale in
execution under the bond action. As
a result he was never given the
opportunity to defend the first applicant - whom he represents as
its “
sole director
” - or himself in the action.
With regard to the
second respondent’s alleged interest in the bond action, the
second applicant explained in the founding
affidavit that the first
applicant’s property, although not specifically mentioned in
the annexure to the restraint order
granted in favour of the
National Prosecuting Authority against,
inter alia
, the
second applicant (cited in his personal capacity as the second
defendant in that litigation), was covered by a paragraph
therein
which provided that the realisable property envisaged therein
included “(a)
ll other property held by the Defendants and
Respondents at any time before or after the granting of this order
whether in their
respective names or not, including all property
held for or on behalf of the Defendants by any person or entity of
the Defendants
in any other company, ...”.
Without explaining
any connection between himself and the property of the first
applicant, the second applicant contented himself
with the
allegation that it was “
evident
” from this
provision that the property was covered by the terms of the order.
Adverting to
paragraph 1.4 of the restraint order, which provides that "...
the Defendants, Respondents and any other person with knowledge
of this Order are hereby prohibited from dealing in any manner with
the property, except as required or permitted by this Order
",
it was contended that, since in the second applicant’s
“
understanding
” the first respondent was “
aware
of the existence of this order,
” it was precluded from
proceeding with the sale in execution. It was further submitted - it
being raised as a “
in limine
” argument - that the
second respondent ought to have been joined “
in these
proceedings
” (presumably a reference to the bond action)
by virtue of his substantial interest therein.
The certificate of
urgency which was filed together with the founding affidavit by Mr
Kubukeli
, counsel for the applicants, suggested that if the
sale of the property were to proceed it would have "
far
reaching negative consequences for the administration of justice
".
This theme was confirmed in the founding affidavit in which the
second applicant alleged that the failure to join the
second
respondent would "
defeat the order of Justice Pickering and
bring the justice system into disrepute.
The second
applicant alleged that upon learning of the impending sale in
execution, he had put his “
best
efforts
”
forward to stop matters from getting to that point but was compelled
to approach the court for urgent relief. These efforts,
according to
him, involved the making of “
several
calls
”
to the offices of the first respondent (after he learned that Mr
Petrie
Burger
of the first respondent’s offices
had tried to contact him), and included a proposal made to it
“
around the proceeds from an imminent sale of shares which
are held by my wife in Lithemba Wonderfontein Coal (Pty) Ltd
”.
He attached a copy of a letter evidencing such offer. This
notwithstanding, the first respondent had remained steadfast
in its
determination to sell the property "
in total disregard of
all the aforegoing points which militate against such a sale going
forward
” (sic).
With regard to the
requirements for the grant of an “
interim interdict
”,
the second applicant alleged,
inter alia
, that if the
property were to be sold in execution and he thereupon succeeded in
proving that the first respondent had “
no cause to (
sell
)
the property”
, irreparable harm would have been caused. To
this was added the caution that “(c)
onsideration has also
to be given to the fact that there is another party who will
potentially be
(caused)
irreparable harm by the sale of the
property without its knowledge, the second respondent. Specifically
there is the harm that
will be occasioned by the undermining of a
Court Order and the administration of justice
”.
On the strength of
the second applicant’s averments taken at face value, and
since the sale was due to commence within 30
minutes of the issue of
the application, a Rule
Nisi
was granted in the following
terms:
"
1.
The Rules relating to forms and service are dispensed with and the
application is heard as one of urgency in terms of rule 6(12)
of the
uniform rules of court;
2. A rule
nisi
is hereby issued calling upon the Respondents to show
cause, if any, to this court on (
Tuesday, 8
February 2011
) at 10H00 or soon thereafter as the
matter may be heard, as to why the following order may not be made
final:
The First
Respondent is interdicted and restrained from proceeding with the
sale in execution of the property described as ERF
6487 East London
commonly known as 30 Beatty Road, Selborne, East London as per its
advertisement in the Daily Dispatch newspaper
of 31 December 2010;
The Applicant is
directed to serve the order at the site of the sale in execution
upon whosoever will be the person in charge
of conducting the Sale
and upon the registered offices of the first and Second Respondent;
Whosoever opposes
this application shall bear the costs thereof;
The Applicant is
allowed to supplement these papers, if necessary, before the return
date of the Rule
Nisi
.”
I interpose to
mention that, although the case file reflects informal service of
the applicant’s founding papers and the
rule
nisi
dated
14 January 2011 on the second respondent - albeit only on 10
February 2011 after the initial return date - he declined
to oppose
the application.
On the extended
return date the applicants sought confirmation of the rule on the
basis solely of the “
non-joinder argument
”,
seemingly abandoning the other “
in limine
”
submission in the founding papers relating to “
non service
of processes
” (sic). Adverting to this last issue first,
the first respondent attached copies of the sheriff’s returns
of service
which confirm that summons was served on the
domicilium
address chosen by the applicants in terms of the covering mortgage
bond number B3549/2008, as well as at the physical address
of the
property. There the summons was served on the second applicant's
personal assistant, one
N
Sidinana
. The warrant of
execution pertaining to the sale was similarly served on both
applicants by registered post to their chosen
domicilium
and
the physical address of the property. In addition thereto, the sale
was advertised in the Daily Dispatch newspaper of 31
December 2010,
and in the Government Gazette of even date. The applicants were
constrained to concede service.
It appeared further
from the first respondent’s answering affidavit (which
allegations were not disputed by the applicants)
that prior
negotiations had been held between the first respondent and the
second applicant, representing both his own interests
and that of
the first applicant, and that a meeting had been held with messrs
Kevin Kaschula
and
Johan Morgenthal
of the first
respondent on 8 June 2010,
inter alia
to discuss the arrears
which had accumulated on the bond account pertaining to the
property. It was also evident from correspondence
put up by the
first respondent,
inter alia
reflecting on this meeting, that
the second applicant was aware that a judgment had been obtained
against the first applicant
and was in fact making attempts to raise
funds to avert the then sale in execution. Any mention of this at
the outset would have
instantly dispelled the notion that the
applicants were in the dark as to either the litigation (the bond
action) or the inevitability
that the first respondent intended
executing against the property.
In my view the
second applicant deliberately concealed the true circumstances
concerning both service of the process as well as
his prior dealings
with the first respondent. A full disclosure in this regard would
also have revealed that the first respondent
had been more than
reasonable in giving the first applicant time to raise the arrears
and that the sale of the second applicant’s
wife’s
shares was a tired refrain, yielding no positive outcome. It also
unfolded that the second applicant, ironically
without the second
respondent’s knowledge or consent, had purported to sell this
very property which he now sought to preserve
on the latter’s
behalf, but nothing had come of the alleged sale.
This
notwithstanding, the applicants persisted that, on a proper
interpretation of the restraint order, this property was “
under
administration
” and the first respondent thereby precluded
from selling it by auction. The gist of the argument on the extended
return
date - if I understood it correctly - was that, since the
applicants were justified in contending that the second respondent
ought to have been joined in the bond action on the basis that he
had a direct and substantial interest in any order that the court
might make, they were entitled to confirmation of the Rule.
The first
respondent denied, however, that there was merit in the first place
to stay the execution or that the applicants had
established the
requirements for the grant of a final interdict, which it in effect
was. It furthermore denied that the applicants
were justified in
approaching this court on an urgent basis. It was submitted that,
since the second applicant was aware of the
first respondent’s
intention to proceed with the sale of the property in June 2010
already, the urgency was “
self-created
”. Further,
with regard to the last sale sought to be averted by the rule
nisi
,
the second applicant had known since 5 January 2011 already of its
intention to proceed in this regard, but had delayed to the
last
minute when, and without the benefit of any input from either
respondent as to the true situation, they were almost guaranteed
to
obtain a stay of the execution.
Pursuant to the
filing of the first respondents answering affidavit, the applicants
delivered a notice in terms of “
rule 6 (11)
”
(sic) advising of their intention to apply at the hearing of the
main application for an order that paragraph 2 of the
first
respondent’s answering affidavit be struck out in its entirety
"
in
terms of rule 6 (15) for non-compliance with
uniform rule 6 (1) and 62 (3)
". In this regard the
applicants filed an affidavit in support of both the "
interlocutory
application
" and in reply. Their complaint was that the
first respondent had disregarded the provisions of rules 6(1) and
62(3) because
it had, under a single numbered paragraph 2, purported
to reply to every allegation in the founding affidavit, whereas the
latter
rule provides that an affidavit shall be divided into concise
paragraphs with consecutively numbered paragraphs setting out the
facts upon which the deponent relies. The first respondent’s
paragraph 2 runs almost the length of the answering affidavit,
13
pages to be exact. The subdivisions falling under paragraph 2 are
further not numbered as paragraphs or sub-paragraphs. The
applicants
claimed prejudice by virtue of the first respondent’s
non-compliance with the relevant rule in that "
they are
unable to identify and isolate paragraphs by the specific numbers
and to deal with the allegations contained therein
."
Despite the alleged
prejudice adverted to, the applicants yet managed to deal
comprehensively with the first respondent’s
answering
affidavit in reply. On the return date the interlocutory application
was abandoned, but the applicants persisted that
there should be
some costs comfort for them by virtue of the prejudice occasioned to
them aforesaid.
It is not clear to
me, however, on what basis the applicants would have been entitled
to seek an order striking out paragraph
2 in terms of the provisions
of Rule 6(15), which sub-rule is directed at matter in an affidavit
which is objectionable on the
basis of it being “
scandalous,
vexatious or irrelevant”
. None of the three scenarios
apply. In my view the applicants’ complaint – if it was
of any gravity at all since
the answers to each individual paragraph
in the founding affidavit were clearly indicated by an appropriate
heading: “
Ad paragraphs 1, 2, and 3
” etc –
should have been addressed through an appropriate notice in terms of
Rule 30(2)(b), followed by an application
in terms of Rule 30(1), if
so advised, to strike out the offending paragraph on the basis of it
constituting an “
irregular step
” in the
proceedings. The applicants waited a whole month after delivery of
the first respondent’s answering affidavit
to file the
interlocutory application which was, at the same time, accompanied
by the reply itself. If they considered themselves
to be prejudiced,
there was further still plenty time before the then extended return
date (which was on 19 April 2011) to file
a notice in terms of rule
30(2)(b). Logic dictates, however, that if they were not precluded
from filing the reply, that they
could not have been prejudiced in
this regard. They had, in effect, taken a further step in the cause
with knowledge of the alleged
irregularity.
In any event the
applicants elected not to pursue the application at the hearing of
the main application and the ordinary consequences
attendant upon
such abandonment should in my mind follow thereupon. In the
circumstances I am not inclined to make any special
costs order
against the first respondent. On the contrary the applicants should
be mulcted with the costs of the application
given the ill-conceived
attempt to oust the first respondent’s opposition by
nitpicking when, not only had they obtained
the Rule on an
ex
parte
basis, but in my opinion deliberately misled the court on
the basis of which they secured the relief.
I turn now to deal
with the question whether there is any merit in the applicants’
in limine
objection that the first respondent failed to join
the second respondent in the bond action. It is not understood what
purpose
would be served by the joinder contended for. Even assuming
for a moment that the property is covered by the terms of the
restraint
order, the impediment posed thereby (insofar as it
concerns the first respondent at least) is that it may not, without
the consent
of the Eastern Cape Division of this court, “
be
attached or sold in execution
”. The curator’s
“
interest
” in the property would presumably
therefore only arise post-judgment, if at all, and thereupon be
limited to being joined
in a separate application to the relevant
court for the requisite consent if such proves necessary. I accept
that the curator
would be cited in such an application, but there
would be no point in admitting him to an action where a judgment has
long since
been taken. His concern with the property would further –
assuming a proper implementation of the restraint order where the
property of a third party is involved (if it really was)– have
been adequately safeguarded by the relevant terms thereof
without a
need to formally involve him in any litigation concerning it. (As an
aside one is sorely tempted to ask why, if the
applicants were so
concerned for the alleged interest of the second respondent, they
did not simply request him to take up the
matter with the first
respondent and call its attention to the possibility that the first
applicant’s property was (on
their version) overlooked by him
before. Indeed they could have done so when the issue of the initial
sale in execution was troubling
everyone’s mind several months
before. I have no doubt that if confronted with a belated formal
intervention by the second
respondent on the basis that the first
applicant’s property was property which fell to be dealt with
by the restraint order,
but had been overlooked before, the first
respondent would not have resisted a request to stay the execution.
A simple phone
call would have sufficed.)
Be that as it may
though I assume that what the applicants meant to say, under the
guise of the non-joinder objection, is that,
because of the
impediment, the sale was precluded, but that is a different issue.
In that regard, it
is common cause that the first applicant was not a party to the
litigation which culminated in the issue of
the restraint order and
that the property does not feature in the schedule of known assets
attached to the order. Still the applicants
persisted that the first
applicant’s private property is included having regard to the
extended meaning referred to in
clause 1.1.2 of the order. Assuming
for a moment in the second applicant’s favour that the thought
had not crossed his
mind to mention the property to the second
respondent before, the question which arises is what meaning is to
be attached to
the provisions of this clause concerning “
all
other property
” not listed in the schedule of assets
annexed to the restraint order.
The provision is
not clearly framed, but if regard is had to the objects of the POCA,
what is intended to be targeted thereby
in my view is property of
the second applicant which is due, or likely to be, confiscated in
terms of an order issued, or likely
to be issued, pursuant to his
own criminal prosecution (See section 25 of POCA). It cannot relate
to the first applicant’s
property held by the second defendant
as director because it is not the first applicant that stands to be
visited with a confiscation
order. The second part of the clause
envisages a financial interest of the second applicant held by
someone or an entity on his
behalf, one which in my view redounds to
his personal benefit or estate. Notionally as far as a company goes
this might relate
to his shareholding, or perhaps a loan account in
his name. He has, however, simply pleaded that he is the sole
director of the
first applicant without disclosing any personal
financial interest in the company. Even the fact that he is the
only
director of the first applicant does not make its property that of
the second applicant. It is an entirely separate entity.
In my view
therefore the property of the first applicant is not hit by the
terms of the restraint order and it could never have
availed the
applicants to claim a real and substantial basis thereby to preclude
the sale from proceeding.
I am inclined to
agree with the submission by Mr
Brooks
, who appeared for the
first respondent that, property analysed, the relief which the
applicants sought and the manner in which
the subsequent relief was
framed in the Rule
nisi
, was a final interdict in form. (The
applicants did not seek to interdict future sales, but were only
concerned with the sale
of 14 January 2011). Therefore the
pre-requisites which the applicants were obliged to establish before
the grant thereof are
those pertaining to the issue of a final
interdict.
These
pre-requisites - which are trite - are the establishment of a clear
right, an act of interference and no other remedy (
Setlogelo v
Setlogelo
1914 AD 221
at 227). The applicants had sought to
assert that the first respondent had no cause to sell, but the
evidence failed to establish
this. Indeed they never sought an order
rescinding the bond judgment, neither was any defence to the action
suggested. Ultimately,
the clear right which they held out for was
the contrived interest of the second respondent, based at best only
on an “
interpretation
” of the terms of a
provisional restraint order granted some three years before. In the
result the Rule cannot be confirmed.
Lastly, I deal with
the issue of urgency. The applicants, rather short-sightedly,
suggested that this was a dead issue already
determined when the
application was brought since the order granted by this court
directed that the matter “
be heard as one of urgency
”.
However, they overlook the purpose of Rule 6(12)(c), which - exactly
in circumstances like these - permits a party aggrieved
by the issue
of an order granted in his absence in an urgent application to have
it reconsidered, including even the question
of urgency. (See in
this regard the approach adopted by
Kroon
J in
Caledon
Street Restuarants C v D’Aviera
[1998] JOL 1832
(SE)
where, although not presented as a “
reconsideration
”
per se
, the respondent in that matter argued as a defence
that the applicant was not entitled to have brought the application
as one
of urgency. The court found that although the matter was ripe
for hearing, the manner in which the applicant had breached the
rules to secure a swift hearing of the matter in the first place
could not at the hearing stage, even though the question of urgency
had seemingly become moot, conveniently be swept under the mat. As a
mark of its disapproval of the unnecessary invocation of
the
provisions of Rule 6(12), it dismissed the application without
regard even to the merits of the matter and ordered the applicant
to
pay the costs).
Reconsideration
takes place on the basis of a set of circumstances quite different
from that under which the original
ex parte
order was issued.
In this regard, I have already alluded above to the basis upon which
the applicants misled this court. With
hindsight, and the benefit of
now having both sides of the story, there was no merit whatsoever in
the applicants furtively approaching
this court, moments before the
sale was due to take place, to avert it. Even if they believed in
the merits of their submission
that the property was covered by the
restraint order, however, they had known of the judgment in the bond
action for a lengthy
period, yet had taken no steps before to
involve the second respondent or seek relief predicated on an
assertion that a sale
was precluded. Similarly they had known for a
while of the attachment, evidently sometime in May 2010, and of the
earlier sale
in execution. The second applicant also knew about the
14 January sale, on his own admission since 5 January 2011, but
waited
until the eleventh hour to launch the present application. He
failed to convincingly explain why he could not bring the
application
any earlier on proper notice to the respondents. In my
view there was no basis to warrant a departure from the requirement
at
least that prior notice be given to them. The applicants patently
abused the urgent proceedings for optimum personal effect without
any regard whatsoever for their rights. There can be no question in
this instance that the first respondent particularly was
prejudiced
by the late approach to court without any prior notice to it.
The dominant
purpose of Rule 6(12)(c) is to afford an aggrieved party a mechanism
designed to redress imbalances in, and injustices
and oppression
flowing from the grant of (usually an interim) order. Whereas a
reconsideration may involve deletion of the order,
either in whole
or in part, or amendment of the order or additions thereto, it may
also, in appropriate circumstances, result
in the applicant having
to pay the costs of the application on an attorney and own client
scale. In this instance, since the
sale has come and gone, redress
is not available to the first respondent by ameliorating the terms
of the order granted. (It
is I have found above, the order was final
in effect.) A punitive costs order warranted by the peculiar facts
of the matter would,
however, be a basis on which to do justice to
the situation. In my view the brazen abuse by the applicants of the
urgent procedure
demands such censure.
In the result the
rule is discharged, with costs, on the scale as between attorney and
own client.
______________________
BC HARTLE
JUDGE OF THE HIGH
COURT
Date of application:
26 July 2011
Date of judgment: 15
November 2011
Appearance for the
Applicant: Adv L Kubukeli
Instructed by : BJ
Jekubeni Attorneys
NBS Building
3rd Floor, Office
309
15 Terminus Street
EAST LONDON
REF. BJ/M2011/08/08
Appearance for the
First
Respondent: Adv R
Brooks
Instructed by : Bate
Chubb & Dickson Inc.
Suite 3, Norvia
House
34 Western Avenue
Vincent
EAST LONDON
REF. MR
CHAMBERS/W72868
Appearance for the
Second
Respondent: Nil