Urgent
Chamber Application
MANGOTA
J:
On
2 July 2014 the applicants and the first respondent concluded two
agreements. The first agreement was a consent to judgment in the sum
of $1,726,192-00 plus interest thereon at the rate of 16% per annum
calculated and capitalised monthly in advance with effect from 21
August 2013 to date of payment in full. The second agreement was a
Deed of Settlement for the sum of $444,000-00 with interest thereon
at the rate of 10% per annum calculated and capitalised every month
in advance as from the date of issue of summons (i.e. 27 August 2013)
to date of payment in full plus costs on a higher scale (emphasis
added).
The
applicants attached to their application the documents which pertain
to the abovementioned agreements. They marked them Annexures A1 + 2
and B1 + 2 respectively. The applicants declared, in each agreement,
that the property which is the subject of this application be
executable in recovery of the amounts which they owed to the first
respondent. Pursuant to the said declaration, the first respondent
instructed the second respondent to attach, for sale in execution,
the following immovable properties of the applicants:-
(a)
Stand 754 Glen Lorne Township 15 Lot 41 of Glen Lorne;
(b)
Stand 739 Glen Lorne Township 15 Lot 41 of Glen Lorne; and
(c)
Stand 735 Glen Lorne Township 15 Lot 41 of Glen Lorne (emphasis
added).
The
applicants attached to their application the writ which instructed
the second respondent to attach the abovementioned properties. They
marked it Annexure J1 + 2. The attachment of their immovable property
compelled the applicants to file the present application with the
court on an urgent basis.
The
first respondent summed up, in a succinct manner, the concerns which
the applicants are raising on the matter which pertains to the
attachment of their properties. The concerns were, or are, basically
that:-
(i)
the first respondent is enjoined at law to dispose of movable
property before execution on immovable property;
(ii)
the first respondent did not advise the second respondent of the
amount to be realised as the applicants have significantly reduced
the debt, and, therefore, the writ itself is defective; and
(iii)
the second respondent has a legal and mandatory obligation to obtain
valuations of properties before execution. (emphasis added)
They
submitted that from the date of the agreements, they paid the sum of
$1,060,000-00 towards a reduction of their indebtedness to the first
respondent. They, accordingly, prayed for a temporary stay of
execution on the basis that the impending sale in execution which had
been scheduled for 19 December 2014, was, in their view, wrong at law
and would invariably cause harm to be visited upon them in a manner
that could not be rectified.
They
stated that it was their intention to obtain a declarator, on the
return date, to the effect that the current attachment and execution
of their property on the writ which the first respondent issued was
illegal and defective at law. They stated that, being void, the writ
which was issued had to be cancelled as, in their view, no valid
execution could be birthed of it.
The
first respondent put up a stiff opposition to the application.
The
second respondent did not appear in person or through legal
representation. He, in fact, said virtually nothing about the
application. He was sued in his official capacity. The position which
he took of the matter convinced the court that he had nothing to say
other than to suggest that he was acting on the instruction of the
first respondent which had obtained an order of this court which
order he was enforcing in line with his duties as an officer of the
court. The court, therefore, remains of the view that he will abide
by whatever decision the court will reach in respect of the present
application.
The
first respondent's attitude to the application was that as the
consent order stated that the properties were declared executable,
there was nothing which was irregular about executing on the
immovable properties. It stated that the property which is the
subject of the application was mortgaged, and, in terms of the
mortgage, the property stood to be sold in the event of a default. It
contended that the applicants defaulted on their payments, and it,
therefore, had every right to dispose of the property which the
applicants themselves declared, out of their own free will,
executable.
The
issues which fall for determination in the present matter are:-
(a)
whether, or not, the present application is urgent; and, if it is
(b)
whether or not, the applicants treated their case with the urgency
which the matter deserved.
It
is evident that, from the time that annexures A1 + 2 and B1 + 2 were
concluded, the parties engaged themselves into some negotiations. The
negotiations aimed at having an amicable resolution of the issue
which pertained to the applicants' effort to clear their
indebtedness to the first respondent. They, in that regard:
(i)
paid the sum of $1,060,000-00 to the first respondent;
(ii)
entered into negotiations with the Ministry of Higher and Tertiary
Education to which they wanted to sell their Stand number 739 Glen
Lorne Township 15 of Lot 41 of Glen Lorne, Harare, to raise further
sums of money which they said they would channel towards the
liquidation of their indebtedness to the first respondent; and
(iii)
made a commitment to pay a monthly sum of $20,000-00 which they said
was designed to bridge over their indebtedness while the case of the
Stand which has been referred to in para (ii) was being concluded.
The
applicants stated that, despite indications on both sides of the
divide pointing to the fact that both parties were interested in a
mutually beneficial resolution of the matter which related to the
liquidation of the debt, communication regarding the collapse of the
negotiations reached them on 16 December 2014. They attached to
their application Annexure 1. The annexure is a letter which the
first respondent's legal practitioners addressed to the applicants'
legal practitioners. The letter is dated 16 December 2014. It, in
part, reads:-
“……our
instructions are that the sale should proceed as advertised. Whilst
our client acknowledged receipt of the $5,000-00 payment, it has
advised that such payment does not significantly reduce the debt owed
by yours to ours.”
It
is on the basis of the abovementioned annexure that the applicants
filed the present application on the basis of urgency. The applicants
attached to their applications Annexures E, F, G and H which they
said were correspondences which took place between the parties during
the period 8th,
to 16th
December 2014. The annexures constitute the negotiations which the
applicants said took place between the parties.
The
applicants, it is evident, became aware of the first respondent's
resolve to satisfy its claim by way of attaching and selling in
execution their immovable properties on 16 December 2014. They filed
the present application with the court on 17 December 2014. They
realised the urgency of the matter and wasted no time. There can,
therefore, be no doubt that the application which the applicants
placed before the court is not only urgent but also that the
applicants themselves treated the application with the urgency which
it deserved.
A
reading of Annexures A1 + 2 and B1 + 2 shows that, as of August 2014,
the applicants owed the first respondent a staggering total sum of
$2,490,782.72. The sum comprises:
(a)
Capital (Ann. A1 & 2) $1,726,192-00; Interest at 16% p.a (Aug
2013-Aug 2014) $27,619-72; Subtotal $2,002,382.72.
(b)
Capital (Ann B1 & 2) $444,000-00; Interest at 10% p.a (Aug
2013-Aug 2014) $44,400-00; Subtotal $488,400-00.
(c)
Grand Total $2,490,782-72.
The
writ which the first respondent issued out of this court aimed at
recovering from the applicants the sum of $1,726,192-00 and interest.
It was confined to that sum of money and not to any other sum which
falls outside its four corners. The first respondent did not advance
any reasons which persuaded it to recover only a part of the debt
which the applicants owed to it and not the whole amount. The writ
does not, therefore, extend to the sum of $444,000-00 and interest.
The court, however, remains of the view that the first respondent
could not include the sum of $444,000-00 and interest in the writ
because the Deed of Settlement on which that amount is based had not
been translated into an order of court. What the first respondent is
entitled to recover in terms of the writ is $2,002,382-72. The
applicants, it has been observed, paid the sum of $1,060,000-00 to
the first respondent. Their aim in the mentioned regard was to reduce
the capital sum of $1,726,197-00 and interest of $276,190-72 on the
same. The applicants' letter of 8 December 2014 (Annexure E1, 2 and
3) is relevant on the point at hand. The letter reads, in part:-
“We
are also advised that when the sum of $1,060,000-00 was made there
was a residue in the region of +/- $400,000-00 which CABS used to
credit the mortgage account. Our client is of the view that CABS
should have consulted it prior to appropriating in the manner it did.
Our client proposes that account be credit to the DIMAF account which
is subject of the writ of execution. Thereby clearing it and the debt
will remain on the mortgage facility which will then be settled with
the disposal of the other property.” (emphasis added)
It
follows from the foregoing that the applicants reduced their
indebtedness to the first respondent when they paid the sum of
$1,060,000-00. What remained outstanding was $942,382-72 and not
$1,726,192-00 which the first respondent instructed the second
respondent to recover from them in terms of the writ. There is a
world of difference between what the second respondent was instructed
to recover and what should have been recovered. A difference between
the two sums of $783,809-00 cannot be said to be negligible in the
view which the court holds of the matter. That difference is not only
significant but it is also extremely prejudicial to the applicants.
During
the hearing of the application, the court was informed that some
movable goods of the second applicant were attached for a sale in
execution of the judgment. Reference is made in this regard to the
second respondent's returns of service numbers 035982 and 045674
which are filed of record. The returns are respectively dated 2
September and 3 November 2014. The remarks portion of the first
return (035982) reads:-
“warrant
of execution enforced on the second defendant's… goods attached,
see inventory overleaf, however, too insufficient to satisfy the
debt.”
The
remarks on the second return (045674) reads:-
“attached
property cannot satisfy the debt. Nulla Bona.” (emphasis added)
Whilst
the value of the attached property in each case remains unknown, the
fact still remains. The fact is that the attached goods did, in the
court's view, further reduce the applicants' indebtedness to the
first respondent's claim to a sum which is less than $942,387-72.
The
applicants' submission that the conduct of the respondents, the
first respondent in particular, prejudiced their case in a material
way cannot be controverted. There is no doubt, in the court's view,
that the sum of $1,726,192-00 which was inserted in the writ
persuaded the second respondent to attach for sale in execution three
immovable properties of the applicants. The probabilities of the
matter are that the second respondent would not have attached all the
three properties if he had properly been informed to recover from the
applicants the sum of $942,387-72 or less than that amount. He would,
in the circumstances of this case, have proceeded to attach one or
two, and not three, properties of the applicants as he did. The
concerns which the applicants raised on this aspect of the
application cannot, therefore, be glossed over, so to speak. It is a
real concern which is not devoid of merit.
The
applicants' second line of argument was that the second respondent
violated the proviso to Rule 326 of the rules of this court. They
stated, correctly so, that the second respondent should have
attached, for sale in execution, their movable goods before he
proceeded to attach their three immovable properties as he did for
the stated purpose.
They
insisted that his conduct in the mentioned regard remained
prejudicial to their interests.
The
proviso upon which their submission was anchored places a mandatory
obligation on the second respondent to always execute court orders in
the manner that the applicants stated. It instructs the second
respondent or his deputy to, in the first place, attach and sell in
execution the movable goods of the applicants. It is only when the
attached goods cannot, after the sale, satisfy the entire debt that
the second respondent is allowed to proceed against the immovable
property or properties of the applicants.
The
first respondent's answer to the abovementioned concern was that
the second respondent complied with the proviso to the rule. It
referred the court to the second respondent's return of service
which the court dealt with in the foregoing portions of the judgment.
The
court remains of the view that the first respondent was not candid
with it on that aspect of the case. The returns, it was observed,
related to the movable goods of the second applicant only. The
movable goods of the first and the third applicants were not taken
into account at all. Annexures K and L which the applicants attached
to their application is relevant on the matter which is in issue. The
annexures show, in clear and simple terms, that the applicants have
sufficient quantities of movable property which the second respondent
could have attached and sold in execution with a view of either
liquidating or, at the very least, reducing the applicants'
indebtedness to the first respondent in a very substantial manner.
The
writ, as worded, furnished the second respondent with some form of
guidance as to how he should have proceeded. The first part of the
writ instructed him to attach the applicants' movable property for
sale in execution of the debt of $1,726,792-00 plus interest. The
second part instructed him to attach the applicants' immovable
property. The second respondent would have gone into this second
process only when he realised that the movable goods which he had
attached were not, by themselves, sufficient to clear off the
applicants' indebtedness to the first respondent. The proviso to
the rule placed a duty upon the second respondent to inquire as well
as make a diligent search of the existence or otherwise of the
applicants' movable property. There is no evidence in the record
which showed that the second respondent satisfied himself that the
applicants did not have movable property which he could have attached
for sale in execution to satisfy, to a greater or lesser degree, the
debt which the applicants owed to the first respondent.
There
is no doubt, therefore, that the second respondent flouted the
proviso of the rule when he acted as he did. His conduct in the
mentioned regard remained very prejudicial to the applicants.
The
importance of the rule cannot be over-emphasised. It is aimed at
safeguarding the immovable property or properties of a debtor. It
goes without saying that an immovable property is, by its nature,
acquired after a person's effort to save his hard-earned money.
That type of property which confers what are termed real rights on
the title holder of the property is more difficult to acquire than
movable goods which more often than not fall into the hands of the
holder and go away from him as quickly as they come. The amount of
money which a person requires to purchase those is a lot less than
what he requires to purchase an immovable property, let alone more of
such properties. It is for the mentioned reason, if for no other,
that the courts, in their wisdom, insisted that a party who is owed a
debt by another must, as a matter of course, start by disposing of
the other party's movable goods before he proceeds to dispose of
his immovable goods. Forced sales do not, by their nature, allow the
debtor to recover meaningfully, in monetary terms, for his property
which is being sold in execution of a judgement debt.
The
properties which are the subject of this application are situated in
what is regarded as one of the upmarket areas of the City of Harare.
One, or two, or all of those properties is, or are, of a commercial
nature. Their forced sale would have caused the applicants
insurmountable prejudice as well as challenges which, in the court's
view, are difficult for the applicants to countenance. The fact that
they would have been sold to recover, for the first respondent, a sum
of money which, in monetary terms, is less than $1,000,000-00 spells
a real mockery of the country's system of justice delivery.
Mr
Magwaliba, for the first respondent, made a statement which relates
to a well-known principle of law. The principle is that when a
mortgage bond is registered against an immovable, the creditor
obtains a real right over the property. He developed an argument on
the known principle and submitted that the right which the creditor
obtains in the mentioned regard entitled the creditor to sell the
property in execution without first exhausting the movable assets of
the debtor.
The
court does not associate itself with the submissions of counsel on
the matter which is in issue. The argument which he developed is not
at all in sync with Rule 326 as read with the remarks of PATEL JA
who, in Govere v Ordeco (Pvt) Ltd and Anor, SC25/14 clarified the
import and meaning of the rule in the following words:-
“…the
rule does not differentiate as between secured and unsecured
creditors. It applies to both without distinction…the plain meaning
of the 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 proceedings to attach immovable
property, the Sheriff or his deputy is enjoined to satisfy himself
that the judgment creditor (debtor) does not own any or has
insufficient movable property to satisfy the judgment debt.”
(emphasis added)
What
PATEL JA stated is more in accord with the law of this country than
it is in discord with it. The remarks which the learned judge of
appeal made have, in addition, a binding effect on the court. They
cannot, therefore, be departed from unless there is a meaningful and
substantial justification for the court to disregard them in
preference to the submissions which counsel made on this aspect of
the case.
The
applicants' third line of argument centred on the meaning and
import of Rule 324 of the rules of this court. They submitted that
the amount which was in the writ was significantly reduced when they
paid the first respondent the sum of $1,060,000-00. They insisted
that the writ which contained the sum of $1,726,192-00 was misleading
and should, therefore, be amended to allow it to reflect what they
actually owed to the first respondent.
The
first respondent argued to the contrary on this aspect of the
application.
It
stated that the applicants made a partial satisfaction of the debt.
It remained of the view that there was, therefore, no need of an
amended writ. The writ, it said, remained valid and execution should
proceed. It was its view that there was no legal basis for suspending
the sale or cancelling the same on the basis that some amount had
been paid. The first respondent submitted that what was required in
the circumstances of this case was to advise the second respondent
that it had been paid a certain sum of money.
Rule
324 states that a writ of execution, once issued, remains of force
until such time as the judgment has been satisfied. The rule is
peremptory. It offers no discretion to the parties, or to one of
them, to alter or amend it.
The
question which begs the answer is whether or not the second
respondent would have attached the applicants' three immovable
properties if his attention had been drawn to the fact that the debt
which remained outstanding was not $1,726,192-00 but was a sum which
is below $1,000,000-00.
The
probabilities are that he would not have attached the three
properties. He would, in the court's view, have attached one
property or two depending on the inquiry which he should have made in
terms of the proviso to Rule 326.
The
first respondent's argument, which is to the effect that the writ
remains valid and enforceable against the applicants, if allowed to
stand, would cause the latter persons to be visited with
uncountenounced injustice.
Their
three immovable properties have already been attached. Insisting that
the sale in execution must proceed means that all the three
properties will be placed under the hammer and most probably the
three of them would, as a forced sale, fetch for much less than what
they would have fetched if they were sold on the open market. They
would be sold in circumstances where the court has already made some
findings which are to the effect that the conduct of the respondents
prejudiced the applicants' case and should, therefore, be
corrected.
The
courts as an institution should dispense justice instead of
injustice. The procedural irregularities which pertain to the
issuance and execution of the writ were, or remained, the main reason
which compelled the applicants to approach the court for redress on
the basis of urgency. It is for the mentioned reasons, if for no
other, that the court will invoke Rule 4C of its rules to depart from
the peremptory nature of the rule which is under consideration. That
departure is required in the interests of justice as between the
parties.
It
will, in terms of Rule 4C, not allow the writ to stand.
The
court states with little, if any, emphasis that process which,
through the over-reaching conduct of one party, visits the other
party with substantial prejudice as is the case in casu, cannot be
allowed to stand let alone be enforced. Equity and fairness which are
the hall mark of a court's work demand that the process be set
aside in the interests of justice.
Rule
351 which relates to valuation of property which is due for
attachments is not peremptory but discretionary. The rule confers on
the second respondent a discretion to, for purposes of equity and
fairness, appoint a fit and proper person who has no interest on
either side of the divide to place a value on the property. The value
so obtained will offer a guide to the second respondent when he puts
the property under the hammer as a sale in execution. The rule is a
sine qua non of what are regarded as fair and reasonable attachments
and sales in execution. Its aim and object are to enable the second
respondent to avoid disputes which, more often than not, tend to
arise out of forced sales such as the present one.
The
Sheriff is, after all, an officer of the court who, in earnest, must
not only act, but must also be seen to be acting, fairly in the
manner that he carries out the duties which the court and the law
impose upon him. He is, if a comparison may be favoured, an
extension of the court and the country's system of justice
delivery. Whatever good thing he does in the execution of his duties
goes to the credit of the judicial spectrum as a whole. He must not
depart materially from the dignity and decorum which parties who
appear before the court expect of the court and all its officials.
Execution of court orders are a necessary collorary of the work of
the courts which are enjoined to dispense real and substantial
justice to all manner of people without fear or favour. Where,
therefore, the Sheriff misuses the discretion which the rules of
court confer upon him, he tarnishes the image of the court in an
unforgivable manner. He must exercise his discretion in an as
judicious a way as the rules and the law allow him to do. Where he
fails in the mentioned regard he, apart from causing the court to be
involved in a multiplicity of litigations, places both the court and
his office into serious disrepute.
The
current is a classic case where the second respondent did not
exercise his discretion in a judicious way. If he had done so, the
present application would not have carried the argument which it
contains. He, as it were, acted on the impulse and proceeded to
attach three immovable properties of the applicants for a sale in
execution. He did not seek the assistance of an independent person to
value the three properties to enable him to assess whether or not he
had to attach one or two or all three properties.
His
conduct in the mentioned regard compelled the applicants to approach
the court as they did. They remained of the view that the apparent
over-attachment which he did was prejudicial to them in a very
serious way. When all has been said and done, therefore, there is no
doubt that the conduct of the respondents told, or tells, a sad story
of over-reaching litigants. The applicants' case succeeds on all
the matters which they raised with the court. They established their
case on a balance of probabilities, against the respondents. Their
prayer was, or is, that execution be stayed pending the return date.
They, however, did not and do not dispute their liability to the
first respondent. What they disputed was the wrong information which
was in the writ and the second respondent's apparent irrational way
or over attaching their properties. Both respondents stand accused of
the shoddy manner in which they conducted themselves in this regard.
The court has considered all the merits and demerits of this
application. It, accordingly, orders as follows:-
That
the application be and is hereby granted with costs.
Mahuni
and Mutatu Attorneys, applicants' legal practitioners
Gill,
Godlonton & Gerrans, 1st respondent's legal practitioners
