Chimukokoko v High Court Sheriff & Ors (HC 7012 of 2016; HH 230 of 2017) [2017] ZWHHC 230 (5 April 2017)

1 HH 230-17 HC 7012/16 SAMUEL CHIKOKOKO versus SHERIFF OF HIGH COURT and PEOPLE’S OWN SAVINGS BANK and CHRISTOPHER MADHUKU HIGH COURT OF ZIMBABWE DUBE J HARARE, 28 February 2017 & 5 April 2017 Opposed Matter T Nyamucheresa, for the applicant T Mpofu, for the respondent DUBE J: The applicant seeks an order setting aside a decision of the Sheriff ordering a private sale in terms of order 40 r 359 (8). The brief background to this application is as follows. The applicant is the owner of a property sold in execution of an order. The third respondent is the buyer of the property. The second respondent obtained an order against the applicant in the sum of $38 040-92 together with interest at the rate of 30% on 5 May 2011. The Sheriff, attached and sold in execution an undivided 1.01% share being share number 18 subdivision A of Upper Waterfalls belonging to the applicant. The sale was confirmed on 23 July 2012 at $60 000-00. The net proceeds of the sale realized was $54 570-00 and was paid to the second respondent [hereinafter referred to as the judgment creditor], in 2014. The judgment creditor gave out that the sale proceeds did not clear the debt. The Sheriff was instructed to sell the applicant’s second property. The applicant filed objections resulting in the Sheriff setting aside to the second sale and a sale by private sale ordered. It is this ruling the applicant requests be set aside. HH 230-17 HC 7012/16 The applicant averred that the first property was to be paid for in cash and the buyer was to be responsible for the payment of interest at the rate of 25% per annum in respect of any unpaid balance of the purchase price with effect from seven days after the date of confirmation of the sale. The applicant argued that full payment for the property was supposed to have been paid on or before the registration or transfer of the property. The sale was confirmed in July 2013 and payment only made in January 2014 and completed in 2016, a delay of 3 years. The purchaser was required to pay the interest that accrued but none was charged. He asserts that he was not responsible for the delays occasioned. The applicant argued that when the property was sold, the purchase price was sufficient to cover the full debt leaving a balance due to him. Had the normal procedures been followed, the debt would have been settled. The applicant submitted that the Sheriff failed to consider all the objections he raised before making his ruling, rendering the ruling improper. The second respondent submitted that the applicant adopted a wrong procedure because his papers disclose material disputes of fact. On the merits it submitted as follows. The order of $34 494-07 obtained against the applicant provided for levying of interest at the rate of 30%. The proceeds of the sale were remitted to it and they were not sufficient to satisfy the judgment debt. The property was sold for $60 000-00 and net proceeds were $54 570-00 and therefore there was no balance due to the applicant and the debt was not paid in full. The process of transfer is lengthy and the delays occasioned are not attributable to anyone. The application procedure is only supposed to be resorted to when all the facts are agreed to, leaving the court’s role only as being to apply the law to the facts. Where a dispute of fact arises on the papers filed in support of an application, a court is entitled to dismiss the application. Herbstein and Van Winsen in The Civil practice of the High Courts of South Africa, 5th Ed @ p 290 state that: “A real dispute of fact arises most obviously when the respondent denies material allegations made by deponents on the applicant’s and prejudice evidence to the contrary.” Material disputes of fact are those disputes that cannot be resolved on papers, see Room Hire Co (Pty) v Jeppe Street Mansions (Pty) Ltd 1949 (3) SA 115, where a dispute is capable of resolution on the basis of the papers before the court, the court is encouraged to adopt a robust HH 230-17 HC 7012/16 approach and try and resolve the dispute on the papers before it. See Soffianti v Mould 1956 (4) SA 150; Tamarillo (Pty) Ltd v B N Aitken (Pty) Ltd (1) SA 398 AD. The judgment creditor‘s position is that the debt has not been paid in full. The applicant’s argued that there were delays in payment of the purchase price resulting in interest accruing and the amounts realized not being able to offset the debt. He maintains that he is not responsible for the interest payments and hence sees no justification for selling his second property . There is no dispute over the figures involved. It is not disputed that there were such delays nor that interest continued to accrue. I view that the question regarding who is responsible for the accrued interest and whether the judgment debt has been paid in full as being a legal issue which is capable of being resolved on the basis of the papers filed and after considering the provisions of rule 357(2). The applicant raised the following objections to the sale of the second property; a) The sale of the second property is being contested under HC 3120/16. It is being performed in light of a debt already settled upon the sale of the other property. Proceeding with the sale is undesirable and will temper with the decision of the court. The sale should be stayed. b) The Sheriff failed to follow procedures laid out in r 348A (2), despite that the property is a dwelling place c) The price offered was unreasonably low. d) The purchaser was not made responsible for the deficit arising out of the delayed payment as required by Order 40 r 357 (2). No interest was charged on him as provided for by the conditions of sale. e) The judgment debt was satisfied upon the sale of the first property and thus the warrant was discharged in terms of r 324. The sale is based on a non-existent warrant of execution. The judgment has since superannuated and cannot formulate a competent basis for any further execution. After considering the objections, the Sheriff ruled that the first property did not raise sufficient funds to clear the debt, was sold at an unreasonably low price and that notification of the sale was made to the respective Ministry. The Sheriff set aside the sale and directed that the property be sold by private treaty. In his ruling, the Sheriff does not deal with the objection related to the charging of interest. It is this failure that is the basis of this challenge. HH 230-17 HC 7012/16 What is in issue is the regularity and validity of the Sheriff’s ruling. A court sitting as a review court in terms of r359 (8) has a discretion which it must exercise judicially. The court has a duty to protect the interests of all parties concerned. It has a discretion over whether or not to confirm the Sheriff’s ruling. The court will only interfere with a Sheriff’s decision on review where it is shown that the conduct of the sale was grossly irregular and that the Sheriff abused his discretion. A reviewing court is entitled to set aside judicial sale proceedings where it is shown that there were substantive irregularities in the conduct of the sale. It must be shown that the irregularity prejudiced and affects the right of persons involved. An irregularity in a sale may result in the sale being invalidated on review. The conduct of a sale by the Sheriff will only be confirmed on review where his conduct is fair and proper. When the Sheriff attaches and sells property in execution of a debt, he performs administrative and quasi- judicial functions. He must act within the limits of his authority. The Sheriff has a public duty to carry out judicial sales in accordance with procedures laid out under Order 40. Rule 359 lays out procedures to be followed where a sale is challenged. The rule places a responsibility on the Sheriff to invite objections and hear them. When the Sheriff sits and hears objections, he has wide discretionary powers. The Sheriff‘s discretion should be exercised reasonably and not haphazardly or arbitrarily. It is the duty of the Sheriff in a judicial sale to protect the interests of all parties concerned. When the Sheriff hears objections he is required to ensure that he considers the views of all the parties. The decisions made must also be fair and have a good basis. A Sheriff, to whom objections to a sale have been brought, is obliged to consider all the objections and give a ruling on each particular objection on the merits, giving reasons why he allowed or discounted the objection. The intention of the legislature in providing a mechanism for challenging the sale process was to protect interested parties from improperly conducted sales. It cannot have been the intention of the legislature that the Sheriff chooses the objections he wants to deal with to the exclusion of others. A failure to determine an objection by a Sheriff without just cause amounts to an irregularity which may result in a sale being invalidated. Whether the objection had merit is not the concern of the court today. A debtor is entitled to object to a sale and have his objection determined in terms of the rules. In this case there was a complete failure to have regard to an objection and determine it. The misdemeanor is grave. The HH 230-17 HC 7012/16 Sheriff was required to consider all the objections raised. The determination of that objection was going to influence the final decision the Sheriff was required to make. If for instance he had ruled that it was the responsibility of the purchaser to pay the interest concerned, and for that reason that the proceeds of the sale were insufficient to discharge the debt, the sale by private treaty would not have been ordered. If on the other hand he ruled that it is the applicant who was required to pay the interest, and that the applicant paid insufficient monies after the first sale, the correct decision would have been that he still owed and a ruling that the second sale should go on would have been appropriate. If for any reason he found it unnecessary to deal with the objection, he ought to have given his reasons for that approach. The Sheriff erred when he failed to determine the one objection. There was a material irregularity. The applicant stands to be prejudiced in that if the Sheriff had considered that objection, there was a real possibility that he could have ruled in his favor resulting in the Sheriff stopping the second sale. If the sale proceeds, he will be required to pay the outstanding balance simply because the Sheriff omitted to make a ruling on the objection. The Sheriff’s failure to probe the objection concerned and rule on whether the purchaser was required to pay interest is irregular . The conduct of the Sheriff is unconscionable. When the Sheriff does an act that compromises the interests of those he is required to protect, such conduct entitles a court to refuse to confirm his decision. The Sheriff failed to comply with requirements of the law. His decision merits being interfered with. If the court were to rubberstamp the ruling as it is by confirming it, this would amount to the court going against the legislative intent resulting in an injustice being done. Such a course would bring the administration of judicial sales into disrepute. Whilst the Sheriff set aside the sale, the position regarding the applicant’s responsibility to pay interest in the first sale remains unresolved. It would be unfair to proceed with the sale of the second property without a determination of the issue of interest. For as long as the issue of interest remains unresolved, the dispute related to the first sale remains unresolved and there is no justification in proceeding with the second sale albeit by private treaty. The Sheriff’s conduct of failing to exercise the function of determining the objection is irregular. He misdirected himself. The ruling does not conform to the law and cannot stand. The HH 230-17 HC 7012/16 decision to set aside the sale has already been made. The court has decided in the exercise of its discretion not to allow the private sale to proceed. In the result it is ordered as follows: 1. The decision of the 1st respondent to hold a private sale of immovable property called, certain piece of land situate in the District of Salisbury called Stand No. 4403 Salisbury Township be and is hereby set aside. 2. The 1st & 2nd respondents shall pay costs of suit. Lawman Chimuriwo Attorneys, applicant’s legal practitioners Mawere & Sibanda, 2nd respondent’s legal practitioners