This
application is made in terms of Rule 359(8) of the High Court of
Zimbabwe Rules, 1971 for the setting aside of the decision of the
second respondent, the Sheriff for Zimbabwe, confirming the sale in
execution of the applicants' immovable property, being Stand 80
Borrowdale Township of Borrowdale Brook Harare.
The
property in question was sold by public auction through the medium of
Cliprunt Real Estate on 5 May 2014 for a sum of US$355,000=.
The
circumstances leading to the sale of the property are that the first
respondent sued the applicants on 16 January 2013 in HC361/13 for
payment of the sum of US$454,874=62 plus interest being a loan
advanced to them. The first respondent also sought an order declaring
the property executable as it had been mortgaged as security for the
loan in the event of a default in payment.
The
applicants may have realised the folly of contesting that claim for,
on 13 June 2013, they capitulated and signed a Deed of Settlement
with the first respondent in terms of which they undertook to pay the
debt on certain terms and conditions. They also agreed that in the
event of default, the first respondent was entitled to make a chamber
application for judgment to be entered against them on the
outstanding balance together with costs on a legal practitioner and
client scale.
As
is the case with most such acknowledgments of indebtedness in this
jurisdiction, the applicants defaulted prompting the first respondent
to move for judgment in terms of the settlement of the parties, but
not before the first respondent had granted its consent to the
applicants allowing them to sell the mortgaged property by private
treaty if they so wished and pay the debt. It was after the
applicants had failed to secure a buyer by private treaty and failed
to pay the debt in terms of the Deed of Settlement that the first
respondent took matters into its own hands.
Having
obtained judgment against the applicants on 7 October 2013, which
remained unsatisfied, the first respondent instructed the Sheriff to
execute against the mortgaged immovable property. The Sheriff
obliged, doing what he knows best, on 5 May 2014, selling the
property by public auction.
The
applicants objected to the confirmation of the sale by public auction
in terms of Order 40 Rule 351(1)(b) of the High Court rules resulting
in a hearing before the Sheriff on 27 June 2014.
At
that hearing, the applicant placed reliance on valuation reports
relating to the property which suggested that the property was worth
more than the highest bid. Entredev Valuation Surveyors had, on 7 May
2014, placed the aggregate market value of the property at
US$922,500= while Quadstar Real Estate said the value was US$945,700=
as at 21 May 2014. The first respondent argued that by agreement of
the parties, the applicants had been allowed to sell the property by
private treaty but they had failed to secure offers in the region of
the valuations which appeared to over-state the value. In fact, by
letter dated 13 June 2013, the same day that the Deed of Settlement
was signed, the first respondent had issued the following letter
granting authority to the applicants to sell the mortgaged property:
“TO
WHOM IT MAY CONCERN
SUCCESS
AUTO (PVT) LTD: Proposed Subdivision of Stand 80 Borrowdale Brook
Township of Subdivision H of Borrowdale Estate registered in the name
of Honeypot Investments (Pvt) Ltd
We
have extended certain banking facilities to the captioned which
facilities were secured by a mortgage bond over the above described
immovable property. We do not object to the issuing of a subdivision
permit or an outright sale of the said property subject to the
following terms and conditions:
1.
The subdivision, bond cancellation and transfer will be handled by
our lawyers.
2.
The subdivision and/or sale should not go beyond seventy-five days
from the date of signing the Deed of Settlement.
Please
note the above condition shall lapse if the said subdivision or sale
goes beyond seventy five days.
Please
be guided accordingly.
Yours
faithfully
Patricia
F Nyazenga
Div.
Director Group Credit Management Division
Bernard Mutambara
Credit
Service Officer”
The
consent to sell the mortgaged property came to naught as, at the
expiration of the period of 75 days set, the applicants had not
managed to sell the property forcing the first respondent to fall
back on remedies available to it, namely, taking judgment and
executing in terms of the court's rules.
After
considering submissions made by the parties, the Sheriff ruled, and,
in confirming the sale he reasoned that:-
“The
price of $355,000=, which was realized
at the auction, is way above the forced sale value of $80,000= and
even exceeds the stipulated market value of $300,000= so cannot be
claimed to be unreasonably low since Sheriff sales are forced sales
and not based on market value. It even exceeds the market value. The
matter has been outstanding since 2012 and the judgment debtor was
given a chance, by the letter dated 13 June 2014, to sale (sic) the
property by private treaty. To ask for 4-6 months to sale (sic) the
property again by private treaty is not possible after they did not
utilize the one year there (sic) were given to sale (sic) by private
treaty. The Sheriff, after considering all the submissions by both
parties, is going on to confirm the sale.”
The
objection of the applicants to the sale had been premised on;
(i)
Firstly, that the price was too low; and
(ii)
Secondly, that they needed to be given four to six months more to try
and sell the property by private treaty.
A
case of closing the gate after the horse had bolted.
The
Sheriff was unconvinced and his reasoning was clearly articulated in
that regard. It is important to note that it was never the
applicants' case, before the Sheriff, that the latter had not
proceeded against their movable property before closing in on the
mortgaged immovable property. In fact, the issue of movable property
has never been the applicants' case.
The
applicants were unhappy with the decision to confirm the sale and
they lodged this application in terms of Rule 358(8) of the High
Court Rules.
In
the founding affidavit of Douglas Makonese, the third applicant, they
stated, after giving a narration of the background, that:-
“9.
The applicants realised that the value that the property was to be
sold for was way below its forced sale value. The amount was
unreasonably low.
10.
A request for setting aside the sale was duly filed and was supported
by two valuation reports. The first by Entredev showed that the
market value of the property was nine hundred and twenty two thousand
five hundred dollars (US$922,500=) whilst its forced sale value was
six hundred and forty six thousand dollars. See Annexure 'D'.
11.
Another report by Quadstar Real Estate showed that the market value
of the property is nine hundred and forty five thousand United States
dollars (US$945,000=) while its forced sale value was six hundred
and sixty nine thousand dollars (US$669,000=). See Annexure 'E'.
12.
The Sheriff, however, went on to reject the request to have the sale
set aside and it is thus determination of the Sheriff which is the
subject of the application. See Annexure 'F'.
GROUNDS
FOR THE APPLICATION
13.
The Sheriff grossly erred in dismissing the valuation reports and
relying on the report of his independent valuer who held that forced
value of the property was eighty thousand dollars and that its market
value was three hundred thousand dollars.
14.
The Sheriff relied on this report when it is quite clear that the
property is primeland which is situated in Borrowdale Brook…,.
15….,.
16.
If the Sheriff had properly applied his mind to the report given by
his independent valuer, he would have noted that it was far from
reality and was only designed to ensure that the sale sails through.
17….,.
18….,.
19.
The fact that the matter has been outstanding, a fact which was taken
into consideration by the Sheriff, does not mean that the property
should be sold for an unreasonably low price. The issue is whether or
not the amount realised is not unreasonably low. Where evidence is
adduced to the effect that it is low, the Sheriff must decline to
confirm the sale. He cannot rush to confirm it simply because in his
opinion the matter has been outstanding since 2012.
20.
It is therefore just and equitable that the decision by the Sheriff
be set aside.
21.
I therefore pray for an order in terms of the draft.”
I
have deliberately quoted extensively from the applicants' founding
affidavit to demonstrate the case which the first respondent was
called upon to answer to because, at the hearing of the application,
the applicants sought to advance a completely different case, a case
not borne by the papers before me, namely, that the sale was null and
void by reason that the Sheriff had not exhausted the applicants'
movable property before proceeding against the mortgaged property -
movable property which was not even identified.
The
first respondent opposed the application stating, in the opposing
affidavit of Bernard Mutambara, its Recoveries Manager, that in terms
of the Deed of Settlement of the parties and the simultaneous consent
issued by it, the applicants were supposed to sell the property by
private treaty. They failed to secure a willing buyer and also failed
to clear the debt in terms of the agreement. It was as a result of
that that the first respondent took judgment which it executed.
The
first respondent maintained that at the hearing before the Sheriff it
became apparent that the applicants' valuers, who had overstated
the value of the property, had themselves failed to secure a buyer
willing to pay a price higher than the one realized at the public
auction. Those valuers could not explain why they failed to secure a
higher price between 13 June 2013 and 27 June 2014, a period of more
than a year. According to the first respondent, values of property
have dropped significantly due to the liquidity crunch prevailing,
and, as such, the values relied upon by the applicants were not only
fictitious but could also not be realised on the market. The
Sheriff's decision to confirm the sale could therefore not be
faulted.
In
their heads of argument, the applicants submitted that the sale ought
to be set aside in terms of Rule 359 of this courts rules on the
basis that the property was sold for an unreasonably low price for a
property located in Borrowdale. They cited Rule 359(1) which reads:-
“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
(c)
Any other good ground.”
It
was further submitted that in seeking to set aside the sale the
applicants were relying on the ground that the property was sold for
an unreasonably low price and no other ground.
In
advancing that argument, reliance was placed on the words of
GILLESPIE J in Morfopoulos
v Zimbabwe Banking Corporation Ltd & Ors
1961 (1) ZLR 626 (H)…, where he said:-
“The
price achieved is therefore itself taken as a reliable indication of
value. For these reasons, there is recognised an onus upon the
challenger to prove that the price so achieved is unreasonably low. A
litigant wishing to discharge this burden must be fully prepared with
properly supported valuations of the property under consideration.
These valuations must reflect the upper and lower limits of the
suggested market price so that the court might make a proper
determination whether the price achieved is unreasonable, that is to
say that it is substantially lower than would reasonably be
anticipated given the expected range of prices. See
Zvirawa
(supra)
at 17 D–E. The valuations that are commonly produced in such
matters frequently tend nowadays to essay an assessment of a forced
sale value. This is itself of some assistance to the court in that
one is by, such an opinion, assisted towards a finding as to whether
or not the price achieved is what one would expect on a forced sale
or unacceptably disproportionate even to such lowered expectations.”
See
also Zvirawa
v Makoni & Anor
1988 (2) ZLR 15 (S)…,.
I
totally agree with the reasoning adopted by GILLESPIE J including his
conclusion…, that:-
“The
awe and finality with which the law seeks to invest the process of
execution cannot be disturbed by such ill refined and non-specific
averments as these. The rights which the third respondent has
acquired cannot be denied him save upon sufficient proof that it is
not fair that he should continue to enjoy them.”
In
the present case, the applicants relied on valuations that were not
only heavily compromised but also that the authors of them were
discredited at the hearing before the Sheriff;
(i)
Firstly, by the variance between their valuations and that of the
Sheriff's independent valuer who pegged the forced value at
$80,000= and the market value at $300,000=; and
(ii)
Secondly, by the fact that the same estate agents had been afforded
the opportunity to sell the property with the consent of the first
respondent but for well over a year they could not secure a buyer at
a price above the one achieved.
Their
valuations were demonstrably unreliable and the Sheriff properly
rejected them.
It
is not without significance that these two valuers were sourced by
the applicants and were, for all intents and purposes, the
applicants' agents whose independence, and therefore, reliability,
was non-existent. Against their evidence was the evidence of the
Sheriff's independent valuer who had no interest in the matter and
was accountable to the Sheriff only, an officer of this court.
The
sale was confirmed by the Sheriff in terms of the rules and the
applicants have not attacked it on the basis that it was improperly
conducted. That confirmation sets into motion the position stated by
the Supreme Court in Mapedzamombe
v Commercial Bank of Zimbabwe & Anor
1996 (1) ZLR 257 (S)…, that:
“Once
confirmed by the Sheriff, in compliance with Rule 360, the sale of
the property is no longer conditional. That being so, a court would
be even more reluctant to set aside the sale pursuant to an
application in terms of Rule 359 for it do so. See Naran
v Midlands Chemical Industries (Pvt) Ltd
SC220-91 (not reported) at pp 6-7. When the sale of the property not
only has been properly confirmed by the Sheriff but transfer effected
by him to the purchaser against payment of the price, any application
to set aside the transfer falls outside Rule 359 and must conform
with the principles of the common law.”
See
also LMS
Timbers (Pvt) Ltd & Anor v The Sheriff of Zimbabwe & Ors
HH484-14; Mhlanga
v Sheriff of the High Court
1999 (1) ZLR 276 (H).
I
am of the view that the sale cannot be interfered with merely because
of the self-serving interests of the applicants who desire a better
price which they themselves failed to achieve, ably assisted by their
own extravagant estate agents, for a period of over a year. The
Sheriff was right in confirming it the way he did especially as he
relied upon the opinion of an independent valuer who fixed the value
at far less than what was achieved.
An
interested third party has come onto the scene having purchased the
property for value, but has unfortunately not been cited, whose
interest cannot be ignored.
The
matter would otherwise end there but for the belated submissions by
Mr Zhuwarara,
who took over from Mr Hashiti,
to advance the point that the sale should be set aside because the
Sheriff did not proceed against and did not exhaust the movable
property of the applicants before executing against the immovable
property. He relied on Rule 326 which provides:-
“It
shall not be necessary to obtain an order of court declaring a
judgment debtor's immovable property executable or to sue out a
separate writ in order to attach and take in execution the immovable
property of any judgment debtor, but where so desired, the judgment
creditor may sue out one writ of execution for the attachment of both
movable and immovable property;
Provided
that the Sheriff or his deputy shall not proceed to attach in
execution the immovable property of the judgment debtor unless and
until he has by due inquiry and diligent search satisfied himself
that there is no or insufficient movable property belonging to the
judgment debtor to satisfy the amount due under the writ.”
In
my view, the proviso to that rule must be read in conjunction with
the rule itself and means that a judgment creditor does not have to
obtain an order declaring the debtor's immovable property
executable and does not have to issue a separate writ against such
immovable property where he already has a writ against the debtor's
movable property. In such situation, the judgment creditor should
simply issue one writ against both movable and immovable property. He
will, however, not be allowed to proceed against the immovable
property until such time that the Sheriff has exhausted the movable
assets.
Mr
Zhuwarara
submitted that even where an order of the court exists declaring an
immovable property executable and a writ against such immovable
property has been issued, the Sheriff still has to go through the
formality of searching for movable property and exhausting it before
he can lawfully proceed against the immovable property. As the
Sheriff did not do that in casu,
the sale is invalid as it offends Rule 326 and should be set aside.
He
cited the judgment of PATEL JA in Govere
v Ordeco (Pvt) Ltd & Anor
SC25-14…, where the learned Judge of Appeal stated:-
“In
the present matter, it is common cause that there was no nulla
bona
return in respect of the assets of Coldrac and no attempted
attachment of the appellant's movables. The order of the court a
quo,
so it is contended, entitles the first respondent, without any
qualifications, to execute against the appellant's immovable,
thereby circumventing the requirements of Rule 326. I am unable to
agree with that contention for the simple reason that the order for
execution granted by the court a
quo
only comes into operation in the event that the appellant fails to
pay the judgment debt. The order is clearly conditional and contigent
upon such failure. Therefore, the appellant is perfectly at large to
tender his movables in satisfaction of the judgment before any
process for the execution of his immovables is iniated. In any event,
the interpretation of Rule 326 propounded by Mr Magwaliba
is clearly not supported by the wording of that rule…,. First and
foremost, the rule patently does not, as is contended for the
appellant, differentiate as between secured and unsecured creditors.
It applies to both without distinction. Secondly, the plain meaning
of this rule is that the judgment creditor has the option to sue out
a separate writ of execution for the attachment of immovable property
or a single writ for the attachment of both movable and immovable
property. In either event, before proceeding to attach immovable
property, the Sheriff or his deputy is enjoined to satisfy himself
that the judgment creditor does not own any or has insufficient
movable property to satisfy the judgment debt.”
See
also Pandhari
Lodge (Pvt) Ltd & Ors v Central Africa Building Society &
Anor
HH720-14…,.
The
difficulty which the applicants have is that this argument is not
borne by the papers. Not only is the submission that the Sheriff did
not exhaust their movable property being led from the bar as it is
missing completely from the founding affidavit, I am also unable to
verify its correctness. We simply do not know whether such movables
were exhausted or not the parties not having addressed such facts in
evidence. I am therefore not in a position to make any pronouncement
in that regard in the absence of evidence.
It
is a principle of our law that an application stands or falls
on its founding affidavit. See the dissenting judgment of MALABA DCJ
in Moyo
& Ors v Zvoma NO & Anor
2011 (1) ZLR 345 (S)…, where he said:-
“My
view of the case is that the application ought to have been dismissed
or granted on the grounds on which the applicants made it.”
That
is the rule in application proceedings.
That
is as it should be because the respondent must be accorded an
opportunity to respond to allegations made in the founding affidavit.
He does so through the opposing affidavit where he places evidence
before the court to rebut whatever is contained in the founding
affidavit. He has no other bite at the cherry, and, as such, the
applicant cannot be allowed to crawl back after the respondent has
submitted the opposing affidavit to introduce evidence which the
respondent would not comment on. That would be an ambush. It is even
more reprehensible when it comes through evidence led by counsel from
the bar. Such is untested evidence, it is not even sworn evidence and
should simply be ignored as I proceed to do.
In
the result, the application is hereby dismissed with costs.
