Firstrand Bank Limited v Ramokgadi and Others (296/02) [2003] ZANWHC 60 (10 October 2003)

CASE NO: 296/02

IN THE HIGH COURT OF SOUTH AFRICA

(BOPHUTHATSWANA PROVINCIAL DIVISION)

In the matter between:

FIRSTRAND BANK LTD : APPLICANT

AND

SAMUEL RAPULA RAMOKGADI

& 3 OTHERS : RESPONDENTS

MMABATHO

DATE OF HEARING AND JUDGMENT : 22 SEPTEMBER 2003

REASONS FOR JUDGMENT : 09 OCTOBER 2003

COUNSEL FOR THE APPLICANT: ADV. H LEVER(SC)

COUNSEL FOR THE RESPONDENT : ADV. A KALLA

NKABINDE J

REASONS FOR JUDGMENT

NKABINDE J: [1] This is an application for an order declaring a sale in execution to be invalid and for costs consequent thereon. In its founding papers the applicant basis the application on a number of grounds which I will deal hereunder with. The respondents, save for the first respondent, did not oppose the application. In his answering affidavit the first respondent advanced several points in limine however, at the hearing, not all the points were persisted in and argued. I will only deal hereunder with the points relied on in argument. After hearing submissions by counsel I granted the order sought with costs and reserved reasons. The reasons now follow. [2] It is common cause that on 4 March 1999 judgment was obtained by First

NKABINDE J:

[1] This is an application for an order declaring a sale in execution to be invalid and for costs consequent thereon. In its founding papers the applicant basis the application on a number of grounds which I will deal hereunder with. The respondents, save for the first respondent, did not oppose the application. In his answering affidavit the first respondent advanced several points in limine however, at the hearing, not all the points were persisted in and argued. I will only deal hereunder with the points relied on in argument. After hearing submissions by counsel I granted the order sought with costs and reserved reasons. The reasons now follow.

[2] It is common cause that on 4 March 1999 judgment was obtained by First

National Bank of South Africa Ltd (now First Rand Ltd, “the applicant”) against the fourth respondent under case no. 1079/98 for payment of the sum of R219 007.94, interest and costs. A nulla bona return was obtained on a writ of execution against movables and thereafter an attachment of the fourth respondent’s immovable property, site 2476 Unit 2 Mmabatho (“the property”), was effected in terms of Rule 46 (3) of the Uniform Rules of Court (“the Rules”). The conditions for sale in execution of the property were prepared. The notices relating to the sale reflected the date of sale as 5 December 2001. Such notices were duly published. On 3 December 2001 the first respondent notified the applicant that he obtained default judgment against the fourth respondent, that he received a nulla bona return in respect of his movables property. He, thereafter, attached the property and bought it at a sale in execution on 8 August 2001 for the sum of R50 000.00. The property has not yet been transferred to the first respondent. It is this sale in execution which the applicant challenges on the grounds that it is flawed as it fell short of compliance with- (a) Rule 46 (5)(a) of the Rules which deals with what is required when immovable property which is subject to any claim preferent to that of the execution creditor is to be sold in execution; (b) Rule 46 (7)(c) of the Rules which deals, inter alia, with the time limits within which the sale in execution must be advertised before the sale; and (c) Rule 46 (7)(d) of the Rules which obliges the sheriff to serve the notice of sale prepared by the execution creditor in consultation with him upon every judgment creditor who had caused the property to be attached and to every mortgagee thereof whose address is known. [3] The first respondent contended- (a) that the applicant was not supposed to be served with a notice in terms of sub-rule (5)(a) of the said Rule as it is not a preferent creditor; (b) that the applicant was not prejudiced by the non-compliance with the time limits prescribed in terms of sub-rule (7)(c) of the said Rule; and (c) that as the applicant was not a mortgagee it was not entitled to be served with a notice of sale in terms of sub-rule (7)(d) of the said Rule.

National Bank of South Africa Ltd (now First Rand Ltd, “the applicant”) against the fourth respondent under case no. 1079/98 for payment of the sum of R219 007.94, interest and costs. A nulla bona return was obtained on a writ of execution against movables and thereafter an attachment of the fourth respondent’s immovable property, site 2476 Unit 2 Mmabatho (“the property”), was effected in terms of Rule 46 (3) of the Uniform Rules of Court (“the Rules”). The conditions for sale in execution of the property were prepared. The notices relating to the sale reflected the date of sale as 5 December 2001. Such notices were duly published. On 3 December 2001 the first respondent notified the applicant that he obtained default judgment against the fourth respondent, that he received a nulla bona return in respect of his movables property. He, thereafter, attached the property and bought it at a sale in execution on 8 August 2001 for the sum of R50 000.00. The property has not yet been transferred to the first respondent. It is this sale in execution which the applicant challenges on the grounds that it is flawed as it fell short of compliance with-

(a) Rule 46 (5)(a) of the Rules which deals with what is required when immovable property which is subject to any claim preferent to that of the execution creditor is to be sold in execution;

(b) Rule 46 (7)(c) of the Rules which deals, inter alia, with the time limits within which the sale in execution must be advertised before the sale; and

(c) Rule 46 (7)(d) of the Rules which obliges the sheriff to serve the notice of sale prepared by the execution creditor in consultation with him upon every judgment creditor who had caused the property to be attached and to every mortgagee thereof whose address is known.

[3] The first respondent contended-

(a) that the applicant was not supposed to be served with a notice in terms of sub-rule (5)(a) of the said Rule as it is not a preferent creditor;

(b) that the applicant was not prejudiced by the non-compliance with the time limits prescribed in terms of sub-rule (7)(c) of the said Rule; and

(c) that as the applicant was not a mortgagee it was not entitled to be served with a notice of sale in terms of sub-rule (7)(d) of the said Rule.

[4] I deal first with the question whether the publication envisaged in terms of sub-rule (7)(c) of the said Rule took place timeously.

Rule 46(7)(c) provides, inter alia, that the sheriff shall require the execution creditor to publish the notice of the sale in execution in the Government Gazette not later than two weeks before the date of the sale. It is common cause that the advertisement of the sale in the Government Gazette did not take place within the time limits prescribed in terms of sub-rule (7)(c). To meet this problem the first respondent applied for condonation for his compliance with the provisions of the sub-rule. Argument was addressed to the Court and after hearing submissions by counsel the request was refused. [5] The object of affording two weeks in terms of sub-rule 7(c) would be frustrated if the time requirements for publications of the notice is not observed. Heher J in Sowden v ABSA Bank Ltd and Others 1996 (3) SA 814 (WLD) at 819F remarked that- “Failure to observe the time requirements for publication of the notice in the Gazette is a non-compliance with a statutory provision in the sense discussed in Maharaj v Rampersad 1964 (4) SA 638 (A) at 646C. The object of affording two clear weeks to publicise and prepare for the sale has not been achieved and neither the execution debtor nor the execution creditor has received the full benefit promised to him by the Rule. The defect is fatal to the validity of the sale.”.

[4] I deal first with the question whether the publication envisaged in terms of sub-rule (7)(c) of the said Rule took place timeously.

Rule 46(7)(c) provides, inter alia, that the sheriff shall require the execution creditor to publish the notice of the sale in execution in the Government Gazette not later than two weeks before the date of the sale. It is common cause that the advertisement of the sale in the Government Gazette did not take place within the time limits prescribed in terms of sub-rule (7)(c). To meet this problem the first respondent applied for condonation for his compliance with the provisions of the sub-rule. Argument was addressed to the Court and after hearing submissions by counsel the request was refused.

[5] The object of affording two weeks in terms of sub-rule 7(c) would be frustrated if the time requirements for publications of the notice is not observed. Heher J in Sowden v ABSA Bank Ltd and Others 1996 (3) SA 814 (WLD) at 819F remarked that-

“Failure to observe the time requirements for publication of the notice in the Gazette is a non-compliance with a statutory provision in the sense discussed in Maharaj v Rampersad 1964 (4) SA 638 (A) at 646C. The object of affording two clear weeks to publicise and prepare for the sale has not been achieved and neither the execution debtor nor the execution creditor has received the full benefit promised to him by the Rule. The defect is fatal to the validity of the sale.”.

[6] The Court may condone non-compliance with the Rules through its inherent power of condonation under the common law or its power in terms of Rule 27 of the Rules. In asking for the condonation the applicant seeks indulgence from the Court. Such applicant must furnish an explanation for the non-compliance and if it is to be of any assistance to the Court in deciding whether “good cause” or “sufficient cause” has been shown the explanation must show how and why the non-compliance came about (see Silber v Ozen Wholesalers (Pty) Ltd 1954 (2) SA 345 (AD) at 352-353; Gordon and Another v Robinson 1957 (2) SA 549 (R) at 552A; Saraiva Construction (Pty) Ltd v Zululand Electrical and Engineering Wholesalers (Pty) Ltd 1975 (1) SA 612 (D & CLD)). Counsel for the first respondent submitted that an explanation for the non-compliance is sparsely given. It does not appear, ex facie the papers, that an explanation is given at all. Counsel submitted further that the applicant has not been prejudiced by such non-compliance. I do not agree. By their nature the provisions of sub-rules (5) and (7) seek to protect the rights and interest of a judgment creditor, preferent creditor and mortgagee, such as the applicant. It is manifest that the price realised for the property at the sale in execution was far less to cover the claim of the applicant. There can therefore be no doubt that the applicant would, had the provisions of the sub-rule been adhered to, have stated its reserve price to safeguard its interests. Accordingly, the indulgence could not be granted.

[7] As to whether the applicant is a preferent creditor in terms of sub-rule (5)(a) and mortgagee in terms of sub-rule (7)(d) it is not necessary for me to deal with these aspects in detail because there is overwhelming evidence in the papers to show that the applicant was a preferent creditor and mortgagee upon whom notices of the intended sale and of the sale in execution, respectively, should have been given. It is common cause that such notices were not given. Counsel for the first respondent submitted that her client is a lay person who did not know that the applicant was a bondholder. It may well be that the first respondent is a lay person but that is not a valid excuse in the circumstances: It is remarkable that the first respondent is represented by an attorney who, supposedly, was a sheriff in the district in which the attached property is situated. If I am correct in my supposition, such a sheriff was, after receiving instructions from the execution creditor, obliged to- “... ascertain and record what bonds or other encumbrances are registered against the property together with the names and addresses of the persons in whose favour such bonds and encumbrances are so registered and shall thereupon notify the execution creditor

accordingly.”. [8] Had the sheriff made enquiries as envisaged in sub-rule (4) he, not only in his capacity as a sheriff but also as the execution creditor’s attorney, would have known that the applicant is the preferent creditor (in terms of sub-rule 5(a)) and mortgagee (in terms of sub-rule (7)(d)). Even assuming that such an attorney was then not the sheriff, he should have enquired from the then sheriff whether or not there was any preferent creditor or bondholder in respect of the property. Had he done so the execution creditor would have known that the applicant was a preferent creditor and mortgagee. The Appellate Division has pointed out in Saloojee & Another NNO v Minister of Community Development 1965 (2)SA 135 (A) at 141C, in a statement frequently approved and followed in many cases, that- “ There is a limit beyond which a litigant cannot escape the results of his attorney’s lack of diligence or the insufficiency of the explanation tendered. To hold otherwise might have a disastrous effect upon the observance of the Rules of this Court.

Considerations ad misericordiam should not be allowed to become an invitation to laxity.... The attorney, after all, is the representative whom the litigant has chosen for himself, and there is little reason why, in regard to condonation of a failure to comply with a Rule of Court, the

litigant should be absolved from the normal consequences of such a relationship,...”.

[7] As to whether the applicant is a preferent creditor in terms of sub-rule (5)(a) and mortgagee in terms of sub-rule (7)(d) it is not necessary for me to deal with these aspects in detail because there is overwhelming evidence in the papers to show that the applicant was a preferent creditor and mortgagee upon whom notices of the intended sale and of the sale in execution, respectively, should have been given. It is common cause that such notices were not given. Counsel for the first respondent submitted that her client is a lay person who did not know that the applicant was a bondholder. It may well be that the first respondent is a lay person but that is not a valid excuse in the circumstances: It is remarkable that the first respondent is represented by an attorney who, supposedly, was a sheriff in the district in which the attached property is situated. If I am correct in my supposition, such a sheriff was, after receiving instructions from the execution creditor, obliged to-

“... ascertain and record what bonds or other encumbrances are registered against the property together with the names and addresses of the persons in whose favour such bonds and encumbrances are so registered and shall thereupon notify the execution creditor

accordingly.”.

[8] Had the sheriff made enquiries as envisaged in sub-rule (4) he, not only in his capacity as a sheriff but also as the execution creditor’s attorney, would have known that the applicant is the preferent creditor (in terms of sub-rule 5(a)) and mortgagee (in terms of sub-rule (7)(d)). Even assuming that such an attorney was then not the sheriff, he should have enquired from the then sheriff whether or not there was any preferent creditor or bondholder in respect of the property. Had he done so the execution creditor would have known that the applicant was a preferent creditor and mortgagee. The Appellate Division has pointed out in Saloojee & Another NNO v Minister of Community Development 1965 (2)SA 135 (A) at 141C, in a statement frequently approved and followed in many cases, that-

“ There is a limit beyond which a litigant cannot escape the results of his attorney’s lack of diligence or the insufficiency of the explanation tendered. To hold otherwise might have a disastrous effect upon the observance of the Rules of this Court.

Considerations ad misericordiam should not be allowed to become an invitation to laxity.... The attorney, after all, is the representative whom the litigant has chosen for himself, and there is little reason why, in regard to condonation of a failure to comply with a Rule of Court, the

litigant should be absolved from the normal consequences of such a relationship,...”.

[9] Accordingly the attacks on the validity of the sale in execution, also on these grounds, had to succeed. B.E. NKABINDE JUDGE OF THE HIGH COURT ATTORNEYS FOR THE APPLICANT : MINCHIN & KELLY ATTORNEYS FOR THE RESPONDENTS:S.E. MONARE & PARTNERS

[9] Accordingly the attacks on the validity of the sale in execution, also on these grounds, had to succeed.

B.E. NKABINDE

JUDGE OF THE HIGH COURT

ATTORNEYS FOR THE APPLICANT : MINCHIN & KELLY

ATTORNEYS FOR THE RESPONDENTS:S.E. MONARE & PARTNERS