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[2013] ZAWCHC 204
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Louw v Firstrand Bank Limited and Others (10122/2013) [2013] ZAWCHC 204 (5 November 2013)
IN THE HIGH COURT OF SOUTH AFRICA
(WESTERN CAPE
HIGH COURT, CAPE TOWN)
CASE
NUMBER
: 10122/2013
DATE
:
5 NOVEMBER 2013
In the matter
between:
CHRISJAN
LOUW
..................................................................................
Applicant
And
FIRSTRAND
BANK LIMITED
....................................................
1
st
Respondent
MOEGAMAD
SOLOMONS
........................................................
2
nd
Respondent
THE
SHERIFF, WYNBERG
EAST
...............................................
3
rd
Respondent
THE
REGISTRAR OF
DEEDS
.....................................................
4
th
Respondent
J U D G M E
N T
DAVIS,
J
:
Introduction
:
This is an
application in which the applicant seeks an order,
inter alia
,
that the attachment in sale in execution of Erf 100980, Athlone, also
known as 3 Guardian Road, Heideveld, Western Cape (“the
property”), which was held on 20 May 2013, be set aside.
Other relief is also sought by the applicant, but that is
not
entirely relevant to the disposition of this case. I should add
that the applicant initially sought an order that the
default
judgment, which was granted against him in favour of the respondent
on 17 January 2012, be rescinded. After this
aspect was dealt
with by the first respondent in an answering affidavit, the applicant
did not pursue the application for rescission.
In short, the
order which was granted on 17 January 2012 remains valid.
The relief
now sought by the applicant is opposed by the first respondent but it
is not opposed by the second respondent nor the
other respondents.
In essence, the applicant bases a claim for relief on the allegation
that the sheriff did not comply with
Rule 46(3) of the Uniform Rules
of Court, in that the writ of attachment was served by the Sheriff,
who cited the incorrect rule
in her return of service and served on a
person of whom it was said was the applicant’s wife, when it is
common cause that
he does not have a wife. Further, the
applicant contends that the notice was not served on him.
First
respondent accepts that there has been non-compliance with Rule
46(3). However this does not go to the root of the matter
and
the sale in execution should be considered to be valid. To the
extent that the court is not satisfied with the question
of
compliance, it should exercise a discretion and condone the second
respondent’s failure to comply strictly with the rule
in
question. In addition, the first respondent contends that no
prejudice was suffered as a result of the non-compliance
with the
rule.
Briefly, this
court can take the following facts into account:
Applicant entered into a loan with the first respondent,
which was
secured by a mortgage bond registered of the property. The
applicant chose his
domicilium
address as 10 Northumberland
Close, Parklands. In 2010, applicant, who had owned the
property, sold it, but failed to inform
the first respondent of any
change of his address. He did not alter his
domicilium
address. It appears that the applicant breached the terms of
the agreement with first respondent and that first respondent
then
instituted action against the applicant in 2011.
On 17 January
2012, as I have already mentioned, judgment was granted against the
applicant, which included an order that the property
be declared
executable. On 18 January 2012, a writ of execution was
issued. On 14 February 2012, a notice of attachment
was
prepared by the third respondent. Furthermore, a letter was
generated on the same day, in which the third respondent
requested
the Sheriff for Cape Town to serve the warrant of execution and
notice of attachment at the applicant’s
domicilium
address. It appears that there is no record that the warrant of
execution and the notice of attachment were served at the
applicant’s
domicilium
address.
In February
2012, the property at the
domicilium
address was sold and the
applicant was not living there. A Mr Bloemberg, who has
some business relationship with the
applicant, was apparently
residing at the address at that time. On 23 February 2012,
third respondent served a writ of execution
on a person, whom she
described as a ‘Mrs Louw’. As I have already mentioned,
this purported to be the wife of the
applicant. It is common
cause that the applicant has no wife. The sheriff was allowed
access to the property.
Her return of service specifies the
features of the house. On 28 February 2012, the sheriff served
a copy of the warrant
of execution and notice of attachment on the
fourth respondent.
Before the
sale in execution, which was scheduled for 12 June 2012, applicant’s
attention was drawn to the sale by an SMS
he received from a company
called Consumer Guardian Services. On 12 June 2012, the sale of
execution scheduled in respect
of the property was cancelled, because
the applicant made payment in the amount of R25 500,00 to first
respondent. A
similar pattern took place in December 2012.
Before the sale in execution scheduled for 11 December 2012, it
appears that
applicant’s attention was again drawn to the sale
by another SMS he received from the same company, Consumer
Guardian
Services. On 11 December 2012, this sale in execution
was stopped as the applicant paid the arrears on his account.
On 20 May
2013, a sale in execution was conducted at the property by the third
respondent and the property was sold to the second
respondent in the
amount of R282 000,00. On 20 May 2013, applicant received
a call from a tenant who occupied the garage
at the property, Mr
Rage, who informed the applicant that he had been approached by
persons who claimed that they had purchased
the property on that day.
So much for
the essential facts. It is accepted by Mr
Van Reenen
,
who appears on behalf of first respondent, that, albeit that there
was service on the occupier (and I am prepared to assume that
there
was proper service in terms of Rule 46(3) no matter that the notice
referred to a Mrs Louw), and further that there was service
on the
fourth respondent, there was no proper service on the applicant.
Accordingly, the question arises as to whether the
relief sought by
the applicant is justifiable for want of non-compliance with Rule
46(3).
I was
referred in this connection to a concurring judgment of Cloete JA
(significantly only signed by two of the five members of
the court)
in
Menqa & Another v Markham & Others
2008 (2) SA 120
(SCA), who at para 46 concluded that:
“
[A]t common law, a sale in execution was
void for want of compliance with an essential formality, but that
non-compliance with non-essential
formalities did not have this
result.”
Notwithstanding
the impressive learning displayed in this judgment, in particular
with regard to the work of
Matthaeus
,
the judgment does not really take the matter further than the
position which existed prior thereto. Indeed, the
dicta
in this judgment are rendered irrelevant, because of later
jurisprudence emanating from the Supreme Court of Appeal in the
judgment
in
Todd v FirstRand Bank &
Others
[2013] ZASCA 61
(SCA). In
this case,
Lewis
,
JA, at para 11, noted that our courts had adopted a strict approach
to compliance with prescribed formalities for a sale in execution.
However, at para 12, she said:
“
As this court
pointed out in
Menqa
,
because legislation (and I would add the rules of court) regulate the
requirements that must be made for a valid sale in execution,
resort
to the Roman Dutch authorities is not always helpful.”
E
n
passant
I should add that this caution
is welcomed, particularly when it is the rules of court which govern
the procedure rather than an
oldauthority which really has very
little application in this connection.
What is
helpful, however, is the basic principle that non-fulfilment of a
requirement will not vitiate a sale in execution if it
does not ‘go
to the root of the matter.
What is the
meaning of the phrase ‘the root of the matter’? In
paragraph 21, Lewis JA suggests the following:
“
The proposed requirement that there be
strict compliance with every requirement to rule 46 for a sale in
execution to be valid,
would limit the ability of a court to ensure
that the interests of justice and fairness are served. The
common law allows
a court to condone non-compliance only where it
does not go to the root of the matter. As I have said, that
entails an enquiry,
whether the failure to observe a requirement
defeats the purpose of the rule or sub-rule and that prejudice would
be suffered by
the debtor if absolute compliance were not required.
That test gives the court the discretion to determine what effect the
non-compliance has had - whether it prejudices a judgment debtor, or
whether the judgment creditor (who may not be responsible
for the
failure to observe a formality, as was the case here) will be
prejudiced by an order that the sale is invalid. A
requirement
of absolute strict compliance could operate harshly against both
debtors and creditors and might have unjust consequences.”
To tease out
the meaning of the phrase, “the root of the matter”, it
is necessary to ask the question as to the purpose
of the rule.
Rule 46(3)(a) provides:
“
The mode of attachment of immovable
property shall be by notice in writing by the sheriff served upon the
owner thereof, and upon
the Registrar of Deeds or another officer
charged with the registration of such immovable property, and if the
property is in the
occupation of some person other than the owner,
also upon such occupier.”
As I have
already indicated, there was non-compliance with the rule, because
although I am prepared to accept that there was service
upon the
occupier and upon the fourth respondent, there was no service upon
the applicant. That, however, is not the end
of the matter.
Rule 46(7)(a), inter alia, provides:
“
(a) The sheriff conducting the
sale, shall appoint a day and place for the sale of such property,
such day being except
by special leave of a magistrate, not less than
one month after service of the notice of attachment and shall
forthwith inform
all other sheriffs appointed in the district, of
such date and place.
(b) The execution creditor shall, after
consultation with the sheriff conducting the sale, prepare a notice
of sale, containing a short description of the property, situation,
the street number, if any, the time and place for the holding
of the
sale and the fact that the conditions may be inspected at the office
of the sheriff conducting the sale, and he or she shall
furnish the
said sheriff with as many copies of the notice as the latter may
require.”
I have cited
a significant portion of Rule 46(7) for the specific purpose of
seeking an answer to the question in whose benefit
is this rule?
Unquestionably, the rule is directed at the owner, being that the
sheriff cannot conduct a sale for at least
a month after service of
the notice of attachment; once notice is served, pursuant to Rule
46(3), a month must pass before a sale
in execution can take place.
The purpose thereof is clear. It provides an owner with
knowledge firstly that an attachment
has been effected pursuant to an
order that has been granted by the court and secondly, that a sale is
now imminent.
The further
question which arises is: if this is the purpose of the rule, how
does this impact upon applicant’s case in the
present dispute?
As set out in the narrative, it is clear that a notice of attachment
was prepared on 14 February 2012.
As at that date, and
subsequent thereto, there was no proper service of the notice upon
the applicant. But as at 12 June
2012, and again on 11 December
2012, applicant must have known:
1.
That a notice of attachment was generated.
2.
That the property was about to be sold.
There is no
other explanation for how it came to pass on two occasions that the
applicant emerged out of the darkness of non-service
and produced
funds to stay the sale. In other words, whatever the purpose of
the rule, the applicant knew about the attachment
and the impending
sale. This is the only inference that can reasonably be drawn
from the facts.
To
return to
Lewis
,
JA’s judgment in
Todd
supra
t
he
enquiry is whether the failure to observe a requirement defeats the
purpose of the rule. The second question which arises
concerns
the prejudice suffered by the debtor, if absolute compliance was not
required.
Rhetorically,
one may ask, in a case such as the present,: was this purpose
fulfilled? It was not fulfulled by virtue of a
strict
compliance with Rule 46(3), but the applicant had knowledge long
before the final sale that there had been a notice of attachment
and
that a sale in execution, pursuant to the order that had been
granted, was about to take place. To an extent, this is
similar
to the position in
Hopkins Boerdery (Edms) Bpk v Colyn
[2006]
1 ALL SA 497
(C), at paragraphs 48ff. In this judgment (a Full
Bench judgment of this Division), one of the issues that arose was
whether
there had been compliance with Rule 46(3). The question
in this case was whether there had been notice provided to both
co-owners.
It was common cause that, while there had been
notice on the one owner, there had been no such notice provided to
the co-owner.
To this,
Van Zyl
, J at para 50 said the
following:
“
Daar bestaan geen twyfel nie dat die tweede
respondent deurgaans bewus was van die regstappe wat teen die eerste
respondent geneem
is, vanaf aanmaning en dagvaarding tot en met die
geregtelike verkoping van die eiendom. Sy was tans meestal
persoonlik teenwoordig
toe die relevante dokumentasie op hom beteken
is en sy was inderdaad persoonlik teenwoordig ten tye van die
geregtelike verkoping.
Op geen stadium het sy enige beswaar
geopper teen die feit dat sy as mede-eienaar van die eiendom nie as
party tot die lening of
daaropvolgende regsprosedures gevoeg is nie.
Sy het ook nooit gepoog om haar onverdeelde helfte van die eiendom
uit te sluit
of andersins te beskerm nie.”
I accept that
Van Zyl J was confronted with a somewhat different set of
facts. But there are significant similarities.
In
both cases, the court could assume that there was full knowledge on
the part of the applicant as to the procedures which had
been
initiated, firstly with respect to the notice of attachment and
secondly, with regard to the sale in execution, both of which
in this
case followed from the judgment which had been granted on 17 January
2012. In short, in
Hopkins
supra
, the court
looked at the substance of the purpose of the rule and used its
definition of the purpose as the touchstone for the
determination of
the case. This approach, in my view, is correct and within the
context of this case is fatal to the application
brought by the
applicant.
It is
important to say something with regard to the question of prejudice.
Mr
Van Reenen
correctly contended, as I have already
noted, that the applicant was aware of the steps taken to attach the
property, both in June
2012 and December 2012. The applicant
knew of the attachment and cannot argue, therefore, as he had done,
that he was prejudiced
by the lack of service of the notice of
attachment over a year before the sale actually took place.
There is no question
that the present application is an attempt to
seize upon a technical argument to frustrate the first respondent and
the recovery
of funds which are legitimately owing to it.
Applicant,
but only in reply, suggested three avenues which he would have
explored had the notice of attachment been served on him:
1.
Mr Bloemberg could have purchased the property.
2.
The property could have been sold outright to a purchaser.
3.
Mr Bloemberg would have advanced the arrears owing to the first
respondent and reclaimed this money from
the applicant upon the sale
of the property.
Mr
Van
Reenen
submitted that all of these hypotheticals are
misconceived. It is doubtful that Mr Bloemberg could have
raised the
money to purchase the property. There is no
indication that he could or would have done so. The applicant
must have
been aware that he had fallen into arrears between the
previous payment to the first respondent in December 2012 and the
impugned
sale. He knew from previous experience that the sale
would be arranged (in that having fallen into arrears between June
and
December 2012, a further sale was indeed arranged). He
could hardly have been taken by surprise as to what then transpired.
The main
option which the applicant considered was the sale of the property.
But, given arguments about prejudice, the applicant
has not alleged
that the sale in execution caused the property to be sold at a price
below its market value.
In my
view, in the light of the decision in
Todd
supra
in
which a court is enjoined to go to the root of the matter and,
therefore, to have recourse to the very purpose of the rule or
sub-rule, together with the prejudice which might have been suffered
by the debtor if absolute compliance were not required, this
is a
case where there has not been prejudice. Indeed there was sufficient
knowledge, by virtue of the conduct of the applicant,
which renders
this application unsustainable.
Accordingly,
the application is dismissed with costs.
DAVIS, J