UCHENA
JA: This
is an appeal against the whole judgement of the High Court.
The
facts of this case are common cause.
On
28 November 2011, the Deputy Sheriff attached immovable property
known as stand number 1301 Tynwald South Township of Stand 1042
Tynwald South measuring 383m2
registered under Deed of Transfer No.9072/2008 (hereinafter referred
to as the property).
The
attachment was pursuant to a writ of execution issued in favour of
the appellant (the judgment creditor a
quo).
The appellant had obtained judgment against one Nompiliso Maphosa in
case number HC6553/11.
The
first respondent challenged the attachment.
He
claimed that he purchased the property from Nompiliso Maphosa and
Tarisai Matsveru in August 2010, long before the appellant was
granted the judgment for which it was attached.
In
view of the first respondent's claim the Deputy Sheriff filed an
interpleader application before the court a
quo.
The
full purchase price was paid to the sellers in August 2010.
Machekeche
and Partners, the legal firm mandated to transfer the property to the
first respondent, had obtained capital gains tax and rates clearance
certificates, and subsequently lodged transfer papers with the
Registrar of Deeds on 20 December 2010.
Transfer
of the property could not be registered, because Lizhibowa Real
Estate (Pvt) Ltd had on 15 December 2010 obtained a provisional order
from the High Court which enabled it to subsequently register a
caveat against the property in dispute.
At
the time this matter was heard in the court a
quo,
that order was still in force.
At
the time the caveat was registered, Lizhibowa Real Estate (Pvt) Ltd
was the only known judgment creditor which had obtained an order
against one of the sellers. This was several months after the first
respondent had innocently bought the property from the sellers.
The
appellant issued summons against Nompiliso Maphosa on 17 August 2011
under case No. HC6553/11, a year after the first respondent had
purchased the property in question. The summons was served on the
first respondent who was already residing at the property in
question.
The
first respondent through his legal practitioners informed the
appellant that he had purchased the property from the sellers and had
taken possession.
Undeterred
by that information, the appellant obtained a default judgment
against Nompiliso Maphosa and subsequently sought and obtained a writ
of execution against her movable and immovable property, including
the immovable property the first respondent had purchased.
On
receiving the writ of execution, the first respondent applied to the
court a
quo
for an order staying execution pending the institution and
finalisation of interpleader proceedings. He had previously obtained
a provisional order staying execution of the same property by
Lizhibowa Real Estate (Pvt) Ltd.
The
court a
quo
granted the first respondent's application.
Whilst
acknowledging that the property was still registered in the names of
Nompiliso Maphosa and Tarisai Matsveru, the court a
quo
reasoned inter
alia
that there were special circumstances entitling it to find in favour
of the first respondent.
The
appellant appealed to this court against the court a
quo's
judgment on the following grounds of appeal:
“1.
The court a
quo
erred in law and misdirected itself in accepting a claim of ownership
from a person who is not the registered owner of the property.
2.
The court a
quo
erred in law and misdirected itself in finding, as it did, that a
purchaser of an immovable property who had not obtained transfer by
way of registration had a better right of ownership than the
appellant whose rights emanated from a judicial attachment in
execution, where the property in question remained registered in the
judgment debtor's name.
3.
The court a
quo
erred and grossly misdirected itself on the facts in finding as it
must be taken to have done, that there were special circumstances in
favour of the 1st respondent, and in any case, that such special
circumstances gave the first respondent the right of ownership of the
immoveable property.”
We
are called upon to determine whether or not a bona
fide
purchaser has any protection at law other than having a personal
right against the seller of the property.
Before
addressing that issue it is important to state that the property in
question was and is still registered in the names of the sellers.
The
court a
quo
based its decision on this court's decision in Moyo
v Muwandi
SC47/03.
The
appellant did not challenge the correctness of that decision,
but it was submitted on its behalf that the circumstances in the case
of Moyo
v Muwandi
can be distinguished from those of this case.
In
the Muwandi
case,
this Court found that there were special circumstances on the basis
of an incomplete cession of rights in property and not the transfer
of ownership from a seller to a buyer. The two issues identified for
determination in the Muwandi
case were:
(a)
whether at the time the right, title or interest in the property was
attached by the Deputy Sheriff it had already been transferred to
Muwandi;
and
(b)
whether, if it had not yet been transferred, there was any basis for
setting aside the sale in execution.
The
appeal in Muwandi's
case therefore related to the cession of rights and interest in a
third party's property and not the transfer of ownership in terms
of section 14(a) of the Deeds Registries Act [Chapter
20:05].
I
must note the distinction between the sale of property and the
cession of rights to property from one person to another. McNALLY JA
in Gomba
v Makwarimba
1992
(2) ZLR 26 (S) at 27G-28B said:
“As
so often happens, the parties have used the word 'sale' to
describe what is in reality a cession of rights, since the house
actually belongs to the Chitungwiza Town Council.… it is
unfortunate that legal practitioners persist in ignoring the
distinctions between sale and cession of rights in these cases, both
because there are many such cases and because there are many such
distinctions.”
There
is a distinction between cession of rights and the transfer of
ownership from one person to another.
Where
parties enter into a contract of sale of land, ownership is passed
through registration in the Deeds Registry in terms of section 14(a)
of the Deeds Registries Act. Cession of rights over immovable
property on the other hand does not result in ownership being passed
from one person to the other. It simply passes limited rights which
fall short of ownership, as ownership remains with the local
authority.
In
this case, the issue is whether or not the first respondent, a
purchaser who has personal rights against the seller can stay
execution of the property on the basis that he bought it,
notwithstanding that it has not yet been transferred into his name.
In
addressing this issue, one should inquire into the nature of rights
which are conferred through cession versus the nature of rights
conferred to a purchaser before ownership is transferred through the
registration of title.
This
will determine whether or not the principles applied in the Muwandi
judgment apply to this case.
Ownership
of immovable property is proved by producing a deed of transfer.
On
the other hand, in the Muwandi
case, rights acquired through cession of rights in immovable property
were proved through registration of a cession at a local authority.
In
that case the cedent had done all he was expected to do to transfer
to the cessionary his rights in the property which belonged to a
third party.
In
the Muwandi
judgment this court dealt with cession of rights at the offices of a
local authority, which does not confer real rights.
The
first respondent holds personal rights against the sellers but will
on transfer get real rights over the property in dispute. He
therefore stands to lose rights superior to those of a cessionary.
It
is apparent that the rights of a cessionary are inferior to the
personal rights of the first respondent, a purchaser of immovable
property who is awaiting the transfer of real rights in the property.
This means the rights of the first respondent who has done all he is
expected to do to get transfer and has established the existence of
special circumstances should also be protected.
The
similarities between the Muwandi
case
and this case are that in both cases the registration of the cession
and of title had not been effected due to circumstances beyond the
purchaser's or cessionary's control, after they had with the
co-operation of the sellers done everything they were expected to do
to effect registration.
They
both deal with circumstances where the seller had willingly
co-operated with the purchaser to effect registration but
registration was not effected through no fault on the part of the
seller and the purchaser.
The
question which was answered in Muwandi
and must be answered in this case is do these facts constitute
special circumstances which enable the court to protect the
purchaser's unregistered rights in the property against execution
by the seller's judgment creditor.
I
must state that a deed of transfer or registration of cession is not
conclusive proof of ownership or the rights of a cessionary. See the
cases of Young
v Van Rensburg
1991 (2) ZLR 149 (S) at 156 D-G and Kassim
v Kassim
1989 (3) ZLR 234 (H) at 237B-D.
It
simply raises a presumption in favour of the holder of the title deed
or the rights of a cessionary until the claimant proves on a balance
of probabilities that he innocently bought the property or cessionary
rights from the owner of the property or cedent. See the case of
Cunning
v Cunning
1984 (4) SA 585 (T).
In
any event, the registration of transfer in the Deeds Registry or
registration of cession at the offices of a local authority or Deeds
Registry does not always reflect the true state of affairs. A title
deed or registered cession is therefore prima
facie
proof of ownership or cessionary rights which can be successfully
challenged.
When
the validity of title or registered cession is challenged, it is the
duty of the court to determine its validity in order to make a ruling
which is just and equitable.
The
fact that it can be challenged is vital for the disposal of this
appeal.
Once
it is accepted that a title deed or registered cession is not
conclusive proof of ownership or cessionary rights, it follows that
the appellant merely has a prima
facie
right to execute against the attached property registered in the
names of the judgment debtor, Nompiliso Maphosa, and her husband,
Tarisai Matsveru.
The
prima
facie
right
is open to rebuttal.
This
may therefore be a basis for setting aside the sale in execution if
the first respondent proves the existence of special circumstances.
Special
circumstances exist where a purchaser has failed to have the property
registered in his name, when he and the seller have demonstrated a
clear intention to effect transfer and when there was no legal
impediment to such transfer or the impediment does not justify the
refusal to grant protection to the purchaser.
The
first respondent purchased and paid the full purchase price for the
property in August 2010. It is common cause that the first respondent
acted promptly to secure registration of title by paying the transfer
fees and obtaining tax and rates clearance certificates. It is
further common cause that the first respondent, in terms of the
contract of sale was entitled to take vacant possession 3 months
after the date of payment of the purchase price, that is, from
November 2010.
When
the appellant served summons against Nompiliso Maposa, the first
respondent was already residing at the property in question, where
service of the summons was effected.
The
transfer could not be registered because Lizhibowa Real Estate (Pvt)
Ltd, a creditor of one of the sellers, had registered a caveat on the
title deeds of the property. The caveat was registered after the
first respondent was already in possession of the property and a day
before the first respondent's transfer papers were filed in the
Deeds Registry.
The
first respondent had done all that a purchaser is required to do to
get transfer.
KOTZÉ
J in the case of Van
Niekerk v Fortuin
1913 CPD 457 at 458-459, commenting on the effect of the existence of
special circumstances against execution of purchased property by the
seller's judgment creditor, said:
“It
seems to me that the plaintiff being a judgment creditor, and the
property being still registered in the name of the defendant, prima
facie the plaintiff has the right to ask that the property shall be
seized in execution, unless
the party interested can show that there are special
circumstances why such an order should not be granted …”
(emphasis
added)
Special
circumstances justify the setting aside of an attachment in execution
on account of a claim by a purchaser who bought the property subject
to execution when the property was free from any right of preference.
Failure
to protect the first respondent, who had without colluding with the
seller purchased the property in good faith when the property was
free from any right of preference would be unjust. It would allow the
judgment debtor to pay his debt through the sale in execution of
property he had already sold and had received payment for. It would
enable the judgment debtor to benefit twice from the same property.
It exposes the first respondent to double loss. He will lose the
purchase price and the property, and be left with the remedy of
damages against a seller whose property will have been executed
against by other creditors. He will most likely not be able to
recover anything from the seller. Such hardships should not be
allowed against the first respondent who is an innocent purchaser.
Mr
Hashiti
for the appellant submitted that the application of the notions of
“equity” “justice” and “fairness” should be sparingly
relied on by the courts.
He
did not however take the argument further by arguing that the
circumstances of this case do not call for the use of the notions of
“equity” “justice” and “fairness”.
This
omission does not help the appellant's case.
It
must be noted that notions of fairness, justice and equity, and
reasonableness cannot be separated from public policy.
Public
policy takes into account the necessity to do simple justice between
individuals. See the cases of Sasfin
(Pty) Ltd v Beukes
1989 (1) SA 1 (A) at 9F-G and Jajbhay
v Cassim
1939 AD 537 at 544.
In
my view, simple justice in the circumstances of this case demands the
setting aside of the appellant's writ of execution and upholding
the decision of the court a
quo.
The
first respondent has clearly demonstrated that the judgment debtor's
title to the property merely remained on paper, as she had
relinquished all her rights in the property to the first respondent,
long before the judgment the appellant seeks to enforce had been
granted.
The
judgment was awarded to the appellant after summons had been served
on the first respondent instead of the judgment debtor. The first
respondent advised the appellant that he had purchased the property
and that the seller no longer stayed on that property, as he was in
possession of the property. In spite of being given this information,
the appellant applied for and was granted default judgment on the
basis of service on the first respondent, well aware that service had
not been effected on the judgment debtor.
I
am satisfied that there are special circumstances in this case, which
justify the court a
quo's
decision.
The
appeal has no merit and should be dismissed with costs.
It
is ordered that:
The
appeal be and is hereby dismissed with costs.
PATEL
JA: I
agree
MAVANGIRA
JA: I
agree
Kantor
& Immerman,
appellant's legal practitioners
Mabuye,
Zvarevashe,
1st
respondent's legal practitioners
