MATHONSI
JA:
On
7 October 2020 the High Court handed down judgment in an application
made by the first and third respondents in terms of Rule 359(8) of
the High Court Rules, 1971.
It
set aside the Sheriff's sale of a property known as lot 8 Brooke
Estate, Harare, in execution of a judgment in favour of Standard
Chartered Bank Limited and granted the first, second and third
respondents three months to either satisfy the judgment debt or find
another purchaser willing to pay more than USD260,000.00 for the same
property.
This
is an appeal against that judgment of the High Court (the court a
quo).
After
hearing submissions by counsel this Court issued the following order:
“1.
The appeal succeeds.
2.
By Consent, the first, second and third respondents shall bear the
costs of suit.
3.
The judgment of the court a
quo
be and is hereby set aside and substituted with the following:
'(i)
The application to set aside the Sheriff's sale be and is hereby
dismissed with costs.
(ii)
The sale of the applicant's property, being certain piece of land
situate in the district of Salisbury called the remainder of lot
Brooke Estate, measuring 7258 square meters, held under Deed of
Transfer No.4935/2004 sold by public auction to the third respondent
in the sum of $260,000.00 be and is hereby confirmed.'”
After
issuing the order we stated that the reasons for doing so would
follow. What follows hereunder are those reasons.
THE
FACTS
Quecom
Engineering (Private) Limited, which is the second respondent herein,
entered into a loan agreement with Standard Chartered Bank Limited,
the fourth respondent herein, in terms of which the latter extended a
revolving credit facility to it with a limit of USD800,000.00.
The
first and third respondents, together with the third respondent's
now deceased wife, bound themselves as sureties and co-principal
debtors for the due performance by the second respondent, of its
obligations under the loan agreement.
In
addition, the first respondent executed a deed of hypothecation over
its immovable property which is now the subject of the dispute
between the parties, as security for the second respondent's
indebtedness to the bank.
In
due course, the second respondent benefited from the loan but failed
to pay the sum of $241,056 which remained owing.
The
bank sued and obtained judgment against the first, second and third
respondents in the sum of $292,272,12 together with ancillary relief.
A
writ of execution against property was issued leading to the
attachment by the sheriff of the immovable property forming the basis
of the current dispute.
Then
began the haggling over the sale of the property which, when put on
sale, would attract unreasonably low prices.
The
first attempt at selling the property on 24 January 2015 attracted a
sale price of US$150,000.00. The first, second and third respondents
filed a request to set aside the sale, which, by consent, was not
confirmed by the sheriff.
On
6 August 2015 the judgment debtors were given an opportunity to sell
the property by private treaty. They failed to do so resulting in the
property being placed on public auction where, on 12 January 2017, it
only fetched a price of $150,000.00.
Again
the judgment debtors requested the setting aside of the sale by the
Sheriff.
At
that stage the parties agreed that they be given a further 4 months
to sell the property by private treaty failing which the sale for
$150,000.00 would be confirmed.
Again
the judgment debtors failed to find a purchaser. As a result, the
sale was confirmed by the Sheriff.
Unhappy,
the judgment debtors filed an application to set aside the Sheriff's
confirmation in terms of Rule 359(8). This was under case number
HC7151/17.
They
obtained an order on 27 September, 2017 setting aside the sale by
private treaty. The court gave them another period of 6 months to try
and sell the property for a price above the $150,000.00 previously
achieved and if they failed, the court directed that the property be
sold by public auction.
The
judgment debtors again failed to sell the property.
On
6 September 2018 the Sheriff sold the property by public action to
the appellant for $260,000.00.
The
judgment debtors would have none of it.
They
still filed with the Sheriff a request in terms of Rule 359(1) for
the setting aside of the sale on two grounds, namely, that:
(a)
The sale was improperly conducted; and
(b)
The property was sold for an unreasonably low price.
The
Sheriff dismissed the request to set aside the sale and proceeded to
confirm it on 29 November 2018.
PROCEEDINGS
IN THE COURT A
QUO
On
12 December 2018 the judgment debtors launched a court application in
the court a
quo
in terms of Rule 359(8) for the setting aside of the Sheriff's
decision to confirm the sale. They cited two grounds for seeking that
relief, namely, that;
(i)
The property was sold for an unreasonably low price; and
(ii)
That they had found a financier who was willing to pay the full
judgment debt on their behalf from the proceeds of the sale of its
property.
The
financier was said to be in the process of selling its own property
to raise funds.
The
application was opposed by the appellant which set out the chequered
history of the matter making it clear that the so-called financier
was in fact a company known as Retour Investments (Private) Limited.
It
had in 2015 been touted by the judgment debtors as a potential
financier without any headway.
In
the course of preparing its judgment the court a
quo
came up with issues not raised by the parties.
It
mero
motu
invited the parties to address it on two legal issues;
(i)
Firstly whether the application before it was one for a review of the
Sheriff's decision.
(ii)
Secondly, it desired to know whether it was open to the Sheriff to
depart from the provisions of Rule 359 by allowing an oral hearing
without the parties having filed formal pleadings. Having done that
the court a
quo
refrained from determining the merits of the application before it
but disposed of the application entirely on the issues raised by it
mero
motu.
The
court a
quo
found that once a request to set aside the sale is made to the
Sheriff, any person intending to oppose it should indicate the
grounds for opposition and submit affidavits to support the grounds
for opposition. It found further that as the appellant had failed to
file written submissions opposing the objection to the sale but
appeared before the Sheriff to make oral submissions, the hearing by
the Sheriff was a nullity.
Having
concluded that the Sheriff's proceedings were a nullity, the court
a
quo
set aside the decision to confirm the sale.
It
however proceeded to grant the judgment debtors a further period of 3
months to either satisfy the judgment debt or find another purchaser
willing to pay more than $260,000.00 for the property failing which
the sale to the appellant would be deemed confirmed and the property
transferred to the appellant.
PROCEEDINGS
BEFORE THIS COURT
The
appellant was aggrieved by the judgment of the court a
quo.
It noted the present appeal on two grounds, namely, that:
1.
The court a
quo
erred in granting the first to third respondents a further three
months to sell the attached property by private treaty without
considering the merits of their objection and whether the objection
constituted good cause to justify such order.
2.
The court a
quo
erred at law in granting the first to third respondents the right to
sell the attached property by private treaty when such right no
longer existed having been granted such opportunity several times
before and when there was no firm offer from a prospective purchaser
to pay a price higher than the public auction.
This
appeal requires the court to determine one issue, namely, whether the
court a
quo
erred in setting aside the confirmation proceedings of the Sheriff
and affording the judgment debtors 3 months period to secure a buyer
by private treaty.
WHETHER
THE COURT A
QUO
ERRED IN SETTING ASIDE CONFIRMATION OF THE SALE
Mr.
Kachambwa
for
the appellant submitted that the court a
quo
erred in determining the matter on grounds other than those provided
for in Rule 359(1) as read with Rule 359(8) and (9).
He
submitted further that the court a
quo
did not focus on the relevant grounds but on points that it raised
mero
motu
and then relied on those points to dispose of the matter.
It
was further submitted on behalf of the appellant that where a request
is made by an interested party to the Sheriff in terms of Rule 359(1)
for the setting aside of a sale, the Sheriff has no power to grant
default judgment as suggested by the court a
quo.
In
all the circumstances, the Sheriff is required, even where no
opposing papers are filed, to consider the request and decide whether
there is a basis for setting aside the sale.
In
advancing that argument Mr Kachambwa
relied on the authority of Zimunhu
v Gwati & Ors SC43/02
which held that even if no opposing papers have been filed following
a request to set aside the sale, the Sheriff still has a duty to
consider the papers before him or her and decide whether they provide
a basis for setting aside the sale.
In
addition, the point was made on behalf of the appellant that once an
application in terms of Rule 359(8) had been made, the court a
quo
was enjoined to consider its merits. It could not set aside the sale
on mere technicalities.
In
this case the property had been sold on a number of occasions
previously but the sales were set aside on the basis of low price.
The
sum of $260,000.00 offered by the appellant was the highest price
ever achieved.
The
judgment debtors had been accorded opportunities before to sell the
property by private treaty. They failed to secure a buyer offering
more than what was achieved at the Sheriff's sale. The valuation
report relied upon by the judgment debtors, which placed the forced
sale value of the property at $307,500.00 was done on 5 December 2018
long after the Sheriff's sale. It was therefore of no use in
determining the application.
Per
contra, Mr Chinzou
for the first, second and third respondents submitted that the court
a
quo
found an irregularity in the proceedings before the Sheriff. The
irregularity was the failure by the appellant to file opposing papers
to the request for the setting aside of the sale.
He
submitted further that having found an irregularity, the court a
quo
was correct in concluding that the proceedings were a nullity and
setting aside the sale. It was correct in not relating to the merits
of the matter.
Regarding
the issue of whether the judgment debtors have a right to procure a
new purchaser Mr Chinzou
submitted that the Sheriff's price was unreasonably low. As such
nothing stopped them from doing so.
He
however conceded that the valuation report submitted by the judgment
debtors was irrelevant.
After
the interventions of the court directed at whether the jurisdiction
of the court a
quo
in
an application of that nature could be triggered if the proceedings
before the Sheriff were a nullity, Mr Chinzou
capitulated, he then suggested that the matter be remitted to the
court a
quo
for a determination on the merits.
The
dispute which gave rise to this appeal was initiated by a request
made to the Sheriff by the judgment debtors in terms of Rule 359(1)
of the High Court Rules. It provides:
“(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.”
Subrule
(1) of Rule 359 therefore imposes limitations on the grounds upon
which an interested party may approach the Sheriff, with a request to
set aside the sale of property in execution of a judgment.
In
his affidavit in support of the objection to the sale which was
submitted to the Sheriff the third respondent set out the grounds at
paras 20 and 21 as follows:
“20.
The purchase price of US$260,000.00 is a slight improvement from the
price of US$150,000.00 fetched in July 2015 which was roundly
condemned by the parties and subsequently set aside by consent of the
parties.
21.
Applicant is still objecting to the confirmation of the sale on the
basis that the purchase price that is being offered by third
respondent is below the forced sale value and the actual market
value.”
The
Sheriff dismissed the objection and confirmed the sale.
The
judgment debtors approached the court a
quo
in terms of Rule 359(8) for an order setting aside the sale.
They
did not seek to be given three months to sell the property by private
treaty which relief the court a
quo
granted mero
motu.
I
mention in passing that the court a
quo could
not
grant relief which was neither prayed for nor established in the
application.
It
is a cardinal principle of our civil practice and procedure that the
onus
is on a person who claims something from another in a court of law to
satisfy the court that he or she is entitled to it. See ZUPCO
Limited v Pakhorse Services (Private) Limited
SC13/17.
Equally
important is the principle that where there is a dispute on some
question of law or fact, there must be a judicial decision or
determination on the issue in dispute. A failure to resolve the
dispute is a misdirection that vitiates the order given. See
Gwaradzimba
v CJ. Petron & Co (Proprietary) Limited
2016 (1) ZLR 28 at p32B-E.
By
the same token, it is a grave misdirection for a court to determine
an issue not placed before it by the parties and proceed to grant
relief not sought by any of the parties.
A
party interested in a Sheriff's sale can only approach the court in
terms of Rule 359(8) where the Sheriff has refused a request made in
terms of Rule 359(1).
In
terms of Rule 359(7);(8) and (9):
“(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 months after he was notified of it, apply
to the court by way of 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.”
The
court a
quo
found that the Sheriff deviated from the rules of court rendering the
proceedings irregular and the “decision reached thereon a nullity.”
It
however went on to issue an order giving the judgment debtors more
time to sell the property. The jurisdiction of the court a
quo
to exercise power reposed to it by Rule 359(9) arises from an
application being made to it in terms of subrule (8). Such an
application can only be made following a decision by the Sheriff
refusing to set aside the sale in terms of subrule (7).
The
Sheriff can only make a decision in terms of subrule (7) upon a
request made to him by an interested party in terms of subrule (1).
Where
the proceedings before the Sheriff are a nullity, as the court a
quo
found erroneously in my view, the jurisdiction of the court a
quo
in terms of subrules (9) cannot be engaged.
It
can only be engaged where there were valid proceedings conducted by
the Sheriff.
There
was a glaring misdirection in granting the judgment debtors relief as
the court a
quo
did.
In
any event, it occurs to me that the failure by the appellant to file
written opposition to the request for setting aside the sale made to
the Sheriff as required by Rule 359(4) could not give rise to a
default judgment.
I
do not read subrules (4) and (7) as giving rise to an automatic bar
against an interested party from contesting the request made to the
Sheriff. The use of the word “may” in subrule (4) suggests
discretion on the party to lodge written notice to the Sheriff.
Equally
so the expression: “On receipt of a request in terms subrule (1)
and any opposing or replying papers” in subrule (7) is indicative
of the fact that opposing papers may or may not be filed.
All
that does not detract from the duty of the Sheriff to consider the
request and decide whether there is a basis for setting aside the
sale.
The
Sheriff did that.
I
am aware that having concluded that the proceedings before the
Sheriff were a nullity, the court a
quo
did not fully engage the merits.
The
court a
quo
however granted 3 months for the judgment debtor to satisfy the
judgment or find another purchaser.
One
can therefore safely say that it regarded the price as being
unreasonably low without giving reasons.
This
is therefore not a case in which the matter can be remitted to the
court a
quo
for a determination on the merits. Either it determined the merits or
its judgment had that effect.
More
importantly, this case has a chequered history wherein a beneficiary
of a court judgment has struggled to execute it since 2014. The
judgment debtors have had ample time given to them by the court to
either pay the debt or sell the property in question at a higher
price. They have failed to do so.
There
must be finality to this long standing case.
No
case whatsoever was made either before the Sheriff or the court a
quo
for the setting aside of the sale.
It
is for these reasons that we issued the order mentioned above.
BHUNU
JA: I
agree
CHITAKUNYE
JA: I
agree
Chakanyuka
& Associates,
applicants legal practitioners
Gill,
Godlonton and Gerrans, 1st
respondent's legal practitioners
Musekiwa
and Associates,
3rd
respondent's legal practitioners
