CHIDYAUSIKU CJ: This is an appeal against a judgment of the
High Court. The facts of this case are
set out in some detail in a judgment of this Court, no. SC 92/05,
which was an appeal involving the same parties. The following is a brief summary of the
facts -
On 23 September
1998 the third respondent obtained judgment against the first and second
appellants over a debt, consequent to which judgment the immovable property
known as Stand 90 Bulawayo Township (hereinafter referred to as "the
property") was offered for sale by public auction. The property in question belongs to the
second appellant who had stood as guarantor to the first appellant for the
judgment debt.
At the public auction
sale, which took place on 11 November 1999, the first respondent emerged
the highest bidder for the property, having offered an amount of
$3.5 million. It was a requirement
in terms of r 356 of the High Court Rules ("hereinafter referred to as
"the Rules") that the second respondent (hereinafter referred to as "the
Sheriff") declare the first respondent (hereinafter referred to as "Bernard
Construction") the purchaser to complete the auction sale. Rule 356 of the Rules provides as
follows:
"356 Declaration
of purchaser by sheriff
If
the sheriff is satisfied that the highest price offered is reasonable, having
regard to the circumstances of time and place and to the state of the property
market, and that the sale was properly conducted, he shall declare the highest
bidder to be the purchaser, subject to confirmation as hereinafter prescribed."
It was peremptory
for the Sheriff to declare Bernard Construction the purchaser to complete the
auction sale. Failure by the Sheriff to
declare Bernard Construction the purchaser rendered the auction sale incomplete
or imperfecta.
The Sheriff not only
refused to declare Bernard Construction the purchaser of the property but
directed that the property be sold by private treaty. The Sheriff's Report, which appears at
pp 22-25 of the record, makes this point abundantly clear. In the first application the Sheriff's
position was equivocal. Bernard
Construction has not disputed the alleged rejection of its bid by the Sheriff. Bernard Construction has not disputed that
the Sheriff directed that the property be sold by private treaty.
Following the rejection
of Bernard Construction's bid, the second appellant applied to the High Court
in case no. HC 1769/2000 to have the sale set aside in terms of
r 359 of the Rules on the sole ground that the property had been sold at
an unreasonably low price. Rule 359
provided at the relevant time as follows:
"359 Setting
aside sales
Any
person having an interest in the sale may make a court application to have it
set aside on the ground that the sale was improperly conducted or the property
was sold for an unreasonably low sum or any other good ground. Any such person shall give due notice to the
sheriff of the application stating the grounds of his objection to confirmation
of the sale. On the hearing of the
application the court may make such order as it deems just."
Rule 359 of
the Rules has since been repealed and substituted by a new provision in
Statutory Instrument 80/2000. I
shall revert to this aspect of the matter later in this judgment.
It is quite clear on the
facts that the second appellant's application to the High Court was
misconceived, in that it assumed that the auction sale was complete. The High Court adjudicated the matter on the
erroneous assumption that the auction sale was complete and the only issue for
determination was the reasonableness or otherwise of the purchase price. The High Court determined that the second
appellant had not discharged the onus
on it of establishing that the purchase price was unreasonably low.
The second appellant
appealed to this Court against the decision of the learned Judge in the court a quo. At the hearing of the appeal the second
appellant sought to have the judgment of the court a quo set aside on two grounds, namely -
(1) that
the Sheriff had not declared Bernard Construction the purchaser of the property
in terms of r 356 of the High Court Rules and therefore the sale by
auction was incomplete or imperfecta;
and
(2) that in
the event of the appeal Court holding that the auction sale was perfecta the court a quo had erred in concluding that the second appellant had
not discharged the onus of proving
that the purchase price was grossly unreasonable.
This Court declined to determine the first ground of appeal because the
issue of the incomplete auction sale had been raised for the first time on
appeal. It had not been raised in the court a quo. That ground of appeal was not dismissed as
it were. It was simply left open. A proper reading of judgment SC 92/05 makes
the above point very clear.
The second ground of appeal was determined. This Court agreed with the court a quo that the second appellant had
not discharged the onus of establishing
that the property had been sold for an unreasonably low purchase price. It was on this basis that the appeal was
dismissed.
The Sheriff understood the
judgments of both the High Court and the Supreme Court to direct him to rescind
his refusal to declare Bernard Construction the purchaser of the property. He then in effect rescinded his previous
determination and declared Bernard Construction the purchaser of the property
in terms of r 356 of the Rules. I
have some reservations regarding the correctness of the Sheriff's understanding
of the judgments of the Supreme Court and the High Court. I will advert to these reservations later on
in this judgment.
The Sheriff, after
rescinding his previous determination, proceeded to declare Bernard Construction
the purchaser of the property in terms of r 356 of the Rules. He did this on 2 June 2006. On 19 June 2006 the appellants filed an
objection to the Sheriff's declaration of Bernard Construction as the purchaser. The appellants' objection was in terms of
r 359 of the Rules (as amended by SI 80/2000). The relevant part of r 359 of the Rules
(as amended) provides as follows:
"359 Confirmation
or setting aside of sale
(1) Subject
to this rule, any person who has an interest in a sale in terms of this Order
may request the Sheriff to set it aside on the ground that -
(a) the sale was improperly conducted; or
(b) the property was sold
for an unreasonably low price;
or on any other good ground.
(2) A request in terms of subrule (1)
shall be in writing and lodged with the Sheriff within fifteen days from the
date on which the highest bidder was declared to be the purchaser in terms of
rule 356 or the date of the sale in terms of rule 358, as the case
may be:
Provided that the
Sheriff may accept a request made after that fifteen-day period but before the
sale is confirmed, if he is satisfied that there is good cause for the request
being made late.
(3) A request in terms of subrule (1)
shall -
(a) set out the grounds on
which, according to the person making the request, the sale concerned should be
set aside; and
(b) be supported by one or
more affidavits setting out any facts relied on by the person making the
request;
and copies of
the request shall be served without delay on all other interested parties.
(4) .
(5) .
(6) .
(7) On
receipt of a request in terms of subrule (1) and any opposing or replying
papers filed in terms of this rule, the Sheriff shall advise the parties when
he will hear them and, after giving them or their legal representatives, if
any, an opportunity to make their submissions, he shall either -
(a) confirm the sale; or
(b) cancel the sale and make
such order as he considers appropriate in the circumstances;
and shall
without delay notify the parties in writing of his decision.
(8) Any
person who is aggrieved by the Sheriff's decision in terms of subrule (7)
may, within one month after he was notified of it, apply to the Court by way of
a court application to have the decision set aside.
(9) In
an application in terms of subrule (8), the Court may confirm, vary or set
aside the Sheriff's decision or make such other order as the Court considers
appropriate in the circumstances.
(10) Where
no request has been lodged with the Sheriff in terms of subrule (1) within
fifteen days from (the) date on which the highest bidder was declared to be the
purchaser in terms of rule 356 or the date of the sale in terms of
rule 358, as the case may be, he shall, subject to the proviso to
subrule (2), confirm the sale."
Rule 359 (as
amended) vests in the Sheriff the power to confirm or deny confirmation of an
auction sale in respect of which he has declared a purchaser in terms of
r 356. Rule 359 (as amended) vests
in the Sheriff a fairly wide discretion to confirm or deny confirmation of an
auction sale. This discretion was
previously vested in the High Court prior to the amendment of r 359.
The second appellant objected to the Sheriff's declaration of Bernard Construction
as the purchaser on the following grounds -
(a) the
second appellant had since paid the judgment creditor and there was therefore
no cause of action at the date of acceptance, i.e. 2 June 2006;
(b) that Bernard
Construction was never declared the highest bidder in terms of r 356 of
the Rules;
(c) that
the said sale was never confirmed as is required by r 359 of the Rules;
and
(d) that no
payment at all was made by Bernard Construction towards the purchase price of
the property.
Bernard Construction opposed the objection on the following grounds -
(1) that
the citation of the parties was wrong and that the proceedings were
procedurally wrong;
(2) that
the application cited both the old and the new Rules and this was fatal;
(3) that
the new Rules were not applicable in this case as our law does not allow
retrospective effect;
(4) that
the application was out of time; and
(5) that
the second appellant had failed dismally to reverse the sale in both the High
Court and the Supreme Court.
The Sheriff, after
considering submissions by both parties, upheld the second appellant's
objection to the Sheriff's declaration and refused to confirm the auction
sale. He declined to confirm Bernard
Construction's bid for a number of reasons set out in some detail in his Report
filed of record. In brief the Sheriff's
reasons for declining confirmation are that -
(1) Bernard Construction's bid for the property was too
low;
(2) the Sheriff himself had declined to confirm the
auction sale and had directed that the property be sold by private treaty;
(3) Bernard
Construction had not paid any of the purchase price to the Sheriff despite
demand for payment by the Sheriff; and
(4) the
appellants had since discharged their indebtedness to the judgment creditor.
Following the Sheriff's
determination, Bernard Construction applied to the High Court to have the
Sheriff's determination set aside on review on the ground that the Sheriff had
no jurisdiction to entertain the matter as it had been finalised by the Supreme
Court and the High Court. Bernard Construction
also contended that the Sheriff had erred in applying r 359 of the Rules
as amended by SI 80/2000 when the sale in question took place prior to the
amendment. The learned Judge in the
court a quo upheld Bernard
Construction's objection and set aside the Sheriff's determination refusing to
confirm the sale. His reasoning in
setting aside the Sheriff's determination appears at p 3 of the
cyclostyled judgment (HC 6463/06).
The learned Judge reasoned as follows:
"I am in agreement with the arguments
advanced on behalf of the applicant.
The respondents have indeed revived issues that were finalised by the
Supreme Court. The sole issue upon
which (the) third respondent challenged the sale before the High Court and later
on appeal to the Supreme Court was the price offered by the applicant. The first respondent had no jurisdiction to
entertain the objection again. I cannot
see how the second and third respondents can seek a reconsideration of the same
subject-matter that was determined by the Supreme Court In this case the subject-matter is the sale
in execution of stand number 90, Bulawayo Township. One cannot select issues arising from the
same subject-matter and seek their resolution piecemeal. There is need to uphold the principle of
finality to litigation.
For the above reasons I find merit
in the application. (The) applicant has
sought costs on a higher scale against (the) first and third respondents."
The appellants now
appeal against this judgment. The
grounds of appeal are set out in the Notice of Appeal, which reads as follows:
"GROUNDS OF APPEAL
(1) The learned Judge erred
and misdirected himself in making a ruling that the dispute placed before the
Sheriff of Zimbabwe was the same dispute with proceedings in case number
HC 1769/00 and SC 92/05 and hence the defence of res judicata was successfully raised by the first respondent.
(2) The learned Judge
ignored the fact that the Supreme Court disposed of the proceedings in case
number HC 1769/00 and SC 92/05 on the sole ground of whether or not
the price was unreasonably low and declined to deal with the question of
whether or not the sale was perfecta
since the papers filed of record did not raise the issue.
(3) The learned Judge failed
to appreciate that the Sheriff of Zimbabwe clearly had jurisdiction to
entertain the objection raised after the Supreme Court judgment in case number
HC (this should be SC) 92/05 and that the decision by the Sheriff was not
challenged on the merits by any of the respondents herein.
(4) The learned Judge ought
to have dismissed the application brought by (the) first respondent in light of
the fact that the judgment creditor had been paid in full and the cause of
action had been extinguished and that (the) first respondent had not paid anything
for the property since 1999 and that the balance of convenience was in favour
of the decision not to confirm the sale.
(5) The learned Judge erred
and misdirected himself in that he was unnecessarily influenced by the need to
uphold the principle of finality in litigation.
(6) There was no
justification in awarding an adverse order (of costs) as against the second
appellant."
Although the notice of
appeal sets out several grounds of appeal, this matter turns on the one issue,
namely whether the Sheriff adjudicated upon and determined a matter that had
already been finalised by this Court and the High Court. In other words, the issue is whether the
defence raised by the first respondent of res judicata
should have prevailed in this matter.
The learned Judge in the court a quo
accepted Bernard Construction's contention that the dispute between the parties
was res judicata. I respectfully disagree with this conclusion. In my view, the defence of res judicata raised by Bernard
Construction should not prevail.
I disagree with the
learned Judge's conclusion for the following reasons -
The essential elements
of res judicata are -
(1) the two actions must be between the same
parties;
(2) the two
actions must concern the same subject-matter; and
(3) the two
actions must be founded upon the same cause of action.
See Hiddingh v Dennysen 3 SC 424 at 450; Bertram v Wood 10 SC 180; Pretorius v Divisional Council of Barkly
East 1914 AD 407 at 409; Mitford's
Exors v Elden's Exors 1917 AD 682; Le
Roux v Le Roux 1967 (1) SA 446 (AD); and Voet 44.2.3.
I accept that both applications concern the same parties and the same
subject-matter. Accordingly, two of the
three requirements for res judicata
have been met. The third requirement has
not been met because the two actions are based upon two different causes of
action. The first application had as its
cause of action the averment that the auction sale price was unreasonably
low. The second application has as its
cause of action the averments set out in the appellants' objection. Among these is the averment that the auction
sale was incomplete or imperfecta, in
that Bernard Construction was never declared the purchaser of the property in
terms of r 356 of the Rules, rendering the auction sale in the first
instance incomplete.
A proper reading of Supreme
Court judgment no. SC 92/05 relating to the first application reveals that
the issue of the auction sale being incomplete or not was specifically left
open. It would be a contradiction in
terms to assert that an issue that has been left open was determined and is res judicata.
According to the
Sheriff's Report, he rescinded his determination refusing to declare Bernard
Construction as the purchaser in terms of r 356 in the first instance in compliance
with the judgments of the High Court and this Court. That was his understanding of the two
judgments.
The Sheriff's interpretation of the two judgments is open to doubt. I, however, do not wish to make a
determination on the meaning of the judgments because the parties did not
canvass this issue on appeal. I merely
wish to make the observation that it is common cause that the Sheriff initially
declined to confirm Bernard Construction as the purchaser of the property in
terms of r 356 of the Rules. Having declined to do so, the Sheriff directed
that the property be sold by private treaty.
Why the property was not sold by private treaty as directed by the
Sheriff is not clear on the record. It would
appear the appellants only became aware of the Sheriff's refusal to confirm the
auction sale in the course of the first application upon reading the Sheriff's
report. The appellants, in my view,
should have then amended their pleadings to include the newly discovered cause
of action. They did not. Instead they unsuccessfully sought to do
this on appeal.
As I have already
stated, the Sheriff refused to declare Bernard Construction the purchaser in
terms of r 356, following which the second appellant launched an
application seeking to set aside the auction sale on the ground that Bernard
Construction's bid was unreasonably low.
It is quite clear that the first application was misconceived for
reasons I have already stated in this judgment. This Court and the High Court determined the
first application on the erroneous assumption that the auction sale was perfecta. The two judgments did not set aside the
Sheriff's determination in the first instance.
If the Sheriff's determination still stands, then the auction sale to
Bernard Construction is imperfecta.
However, even if I were
to proceed, as I will do, on the basis accepted by both parties in this
application, that the Sheriff correctly rescinded his original determination,
reconsidered the matter afresh and declared Bernard Construction the purchaser,
I will arrive at the same conclusion.
The Sheriff rescinded his original determination and declared Bernard
Construction the purchaser on 2 June 2006. The Sheriff accepted the objection of the
appellants to his 2 June 2006 declaration on 19 June 2006. He adjudicated on the objection and declined
to confirm the auction sale. The fact
that the auction sale had taken place prior to that date does not render
r 359 (as amended) inapplicable. The
critical time, in my view, is the date of the relevant declaration, namely 2
June 2006. Accordingly, the issue of
retrospectivity does not arise.
Finally, this matter was
determined by the court a quo on
the basis of res judicata. The merits of the Sheriff's determination,
firstly in refusing to declare Bernard Construction as the purchaser in the
first instance and, secondly, the Sheriff's refusal to confirm the auction sale
in terms of r 359 (as amended) have never been adjudicated upon on the
merits.
This matter has been going
on for about ten years. Referring this
matter back to the High Court for the purpose of determining the matter on the
merits would not be in the interests of justice as that would merely prolong
litigation in this matter. Even more
importantly, none of the parties has asked this Court to refer the matter back
to the High Court for determination on the merits. The need to bring finality to litigation in
this matter is imperative. The High Court would be in no better position
to determine the application on review than this Court.
The facts of this matter are virtually common cause. Rule 356 and r 359 confer some
measure of discretion on the Sheriff to declare and confirm purchasers in
auction sales. The Sheriff exercised that
discretion in terms of r 356 and r 359 of the Rules. There is nothing on the record that remotely
suggests that he misdirected himself in the exercise of that discretion. There is absolutely no basis for suggesting
that that discretion was exercised in a grossly unreasonable manner. In short, there is no basis for possible judicial
interference on review on the merits.
In the result, the
appeal is allowed with costs. The
judgment of the court a quo is
set aside and substituted with the following -
"The
application is refused. The decision of
the Sheriff in refusing to confirm the sale is allowed to stand. Costs follow the result."
SANDURA JA: I
agree
GWAUNZA JA: I
agree
Chinamasa, Mudimu, Chinogwenya & Dondo,
appellants' legal practitioners
James Moyo-Majwabu
& Nyoni, first respondent's legal practitioners