IN THE HIGH COURT OF SOUTH AFRICA DURBAN AND COAST LOCAL DIVISION REPORTABLE 11974/2006. KRISHENLALL HIRALAL APPLICANT versus

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1 IN THE HIGH COURT OF SOUTH AFRICA DURBAN AND COAST LOCAL DIVISION REPORTABLE 11974/2006 KRISHENLALL HIRALAL APPLICANT versus LUGASEN NAICKER FIRST RESPONDENT SHANIKA NAICKER SECOND RESPONDENT RESERVED JUDGMENT Delivered on: 9 September 2008 NTSHANGASE, J [1] The applicant, in what I shall refer to hereafter as the main application, seeks an order directing the first and second respondents and all other persons who occupy through them to vacate the property situated at 36 Courtown Crescent, Erf 79, Avoca Hills, Registration Division FU Province of KwaZulu-Natal [ the property ], failing compliance their eviction from such property. [2] The first and second respondents oppose the application and, in a counterapplication seek an order interdicting and restraining the first respondent from selling, disposing of or in any way encumbering the property which, they allege, was transferred in improper circumstances by the third and fourth respondents to the applicant [in the main application], the first respondent in the counter-application, be directed to do all things necessary to cancel the transfer of the property from the second respondent [sic] to the first respondent, and that the first, third and fourth respondents be and are hereby responsible for all costs pertaining to the cancellation of the transfer of the property from the second respondent [sic] to the first respondent, and to pay the costs of the counter-application jointly and severally. [3] The counter-application is opposed by the first as well as the second respondent, hereafter referred to as Ithala on the basis that the applicants 1

2 have no locus standi to seek the relief they desire, and that the fourth respondent, [ the sheriff ] as the proper person in terms of clause 7(a) of the conditions of sale of the property read with Rule 46(11) of the Uniform Rules of Court to cause the sale to be cancelled for failure to comply with contractual obligations did not do so, and that the first respondent, having performed in terms of a valid and a binding contract, the property had already been sold and properly transferred and registered in his name. [4] At the outset of proceedings counsel agreed that the counter-application be dealt with first as the decision on the main application rests thereon; if the counter-application succeeds or fails the main application in turn would fail or succeed. [5] The basis for the relief claimed on the counter-application is the failure of the sheriff to cancel the sale when his entitlement to continue with it had been terminated by instruction from Ithala, the execution creditor in the matter; alternatively that as at 12 April 2006 the sheriff did not have the written instructions from Ithala to proceed with the sale, which was in breach of the provisions of Rule 46(4) of the Uniform Rules of Court; and that the guarantee belatedly put up by the first respondent to secure the balance of the purchase price of the property was an occurrence in breach of the conditions of sale. The Sheriff s failure to cancel the sale and the effect of Rule 46(4) [6] The applicants became owners of the property when they purchased it in This matter arises from its sale by the sheriff to the first respondent on 3 March 2006 following its attachment by writ issued on 23 August 2004 pursuant to a default judgment granted against the applicants in case 11347/2004 as a result of mortgage bond foreclosure proceedings by Ithala against the applicants. On 15 June 2006 the property was registered in the name of the first respondent. 2

3 [7] It came to the knowledge of the applicants when they consulted a Mr Khumalo of Ithala that the first respondent was the nominated purchaser in respect of the property and that the first respondent had not furnished the requisite bank or building society guarantee to secure the balance of the purchase price within the period stipulated in clause 6(a) of the conditions of sale in execution. In another consultation of the applicants with a Mr Rudi Brunzlaff [ Rudi ] the Head : Legal of Ithala an undertaking was made by Rudi in terms whereof Rudi communicated to Nonhlanhla, also of Ithala: Please instruct Ngidi & Ass. to request the sheriff to cancel the sale in execution as the purchaser did not comply in terms of the conditions of sale. Subsequent thereto, on 12 April 2006, the attorneys Ngidi-Gcolotela-Peter Incorporated wrote to the sheriff to instruct the sheriff to urgently attend to the cancellation of the sale which took place on the 3 rd March 2006 It is not disputed that the sheriff received such communication. He subsequently received a letter from attorneys Bux and Associates on 19 April 2006 which in part reads: We accordingly undertake to pay over the balance of the purchase price plus interest from date of sale to date of transfer, both days inclusive upon registration of transfer. The first respondent communicated to the sheriff to proceed with the transfer of the property as he had sufficient cash reserves to pay the balance of the purchase price. The sheriff did not cancel the sale, but proceeded to effect transfer of the property into the name of the first respondent. The first respondent duly paid the balance of the purchase price. [8] The failure to cancel the sale is attacked as a reviewable irregularity which, in terms of the applicants contention, occurred when the fourth respondent s entitlement to continue with the sale in execution was terminated by the third respondent when he was instructed to cancel the sale. This refers to a 3

4 purported termination by letter of the third respondent dated 12 April 2006 written to the sheriff on instructions of Rudi of Ithala. [9] Now any suggestion that such letter would terminate the sheriff s entitlement to continue with the sale overlooks the fact that in the case of an auction, a sale is effected before any document passes; as soon as the bidding closes there is a sale which can be enforced by law. 1 Such a sale was concluded with the first respondent on 3 March The applicant s contention is premised on an apparent failure to distinguish between the sale and transfer of the property as two distinct transactions with regard to the execution against immovable property, and also upon a reliance on Rule 46(4) as empowering an execution creditor not only to instruct the sheriff to sell property in execution but also to instruct the sheriff to undo the sale. The failure to distinguish between a sale and transfer is evident from the following submissions in applicants heads of argument. At the time that the fourth respondent gave transfer to the first respondent, he did not possess written instructions to proceed with the sale. On the contrary he had instructions not to proceed. This postulates an interpretation of the word sale as being wide enough to embrace also a transfer of immovable property to a purchaser. It is a postulation contrary to various authorities. In approval of the conclusion reached in argument faced by the court over the interpretation of the word sale in Modelay v Zeeman and Others 2 Combrink J, in Syfrets Bank Ltd and Others v Sheriff of the Supreme Court, Durban Central and Another; Schoerie NO v Syfrets Bank Ltd and Others 3 stated: Similarly, in my view, the draftsman in Rule 46 had in mind two distinct transactions with regard to execution levied against immovable property the one is the sale of the property and the 1 De Villiers v Parys Town Council 1910 OPD 55 at (4) SA 639 (A) (1) SA 764 (D) 4

5 other the transfer thereof. [10] A further contention advanced by Mr Mossop on behalf of the applicants is that there is nothing contained in Rule 46 that prohibits an execution creditor, having given such written instruction to the sheriff to proceed, from withdrawing such instruction. He argued that there is no reason why the execution creditor cannot say: Look, having told you to go ahead we have now changed our mind, we would rather explore this avenue to recover the money to us, rather than following a judicial sale in execution, so do not carry on with it. I find no merit in this submission. This cannot happen once the sale has been concluded. The relevant part of Rule 46(4) relied upon by the applicants to show that the sheriff derives the power to act from the execution creditor which, as is contended, then also empowers the execution creditor to withdraw the power to act, reads: Upon receipt of written instructions from the execution creditor to proceed with such sale Rule 46(4) provides for the execution creditor to issue written instructions to the sheriff to proceed with a sale. Once that instruction is carried out or discharged, the force of the instruction is spent. What remains for the execution creditor is only the right to receive proceeds of the sale in execution. Nothing empowers him to withdraw such executed instruction, and the sheriff therefore did not act in breach of Rule 46(4). It was further submitted on the authority of Pugin v Pugin 4 that a mandate may be terminated at any moment. [11] The indicated passage relied upon in Pugin supra reads: According to the common law the authority of an agent may be terminated at any time by either the principal or the agent (1) SA 791 (W) at 793F-G 5

6 Now, the sheriff does not act as an agent of the execution creditor. In the Syfrets case supra 5 it was stated: When the sheriff attaches and sells the property in execution he does not act as an agent of the judgment creditor or the judgment debtor but does so as an executive of the law. [12] The position of the sheriff in a sale in execution is defined as follows in the Syfrets case supra 6 : Accordingly, when immovable property is sold by the sheriff in terms of Rule 46, he becomes a party to the contract suo nominee and he is bound to perform his obligations thereunder, which includes the giving of transfer of the property to the purchaser, which when effected is considered done as validly and as effectually as if he were the owner of the property (vide Rule 46(13) and see, too, Sedibe s case supra at 676D). [13] A further submission advanced as vitiating the sale relates to the first respondent s failure to provide, within the period stipulated in clause 6(a) of the Conditions of Sale, a bank or building society s guarantee to secure the balance of the purchase price. As was indicated earlier in this judgment, the sheriff was provided with an undertaking from attorneys Bux and Associates to pay over the balance of the purchase price. It was admittedly not a bank or building society s guarantee. Although there may be room to argue for the need to consult with the execution creditor where the purchaser s offered fulfilment of a condition does not accord with the conditions as prepared by the execution creditor in terms of Rule 46(8) of the Uniform Rules of Court, such would be a matter of concern to the execution creditor and not the execution debtor. 5 At 773D-E 6 At 773J-774A In the exercise of his statutory authority the sheriff decided to accept the undertaking from attorneys Bux and Associates instead of acting in terms of 6

7 Rule 46(11) to cause the sale to be cancelled by a judge. In this matter the sheriff is deemed to have waived the time limits set in the conditions of sale insofar as securing the balance of the purchase price is concerned for, as was appositely referred to by Mr Naidoo, in the case of Kragga Kamma Estates cc and Another v Flanagan 7 Nestadt JA cited as relevant the following passage from an American judgment quoted in Williston on Contracts 3 rd ed vol 6 s 856 at 232: Where the time of performance is of the essence of the contract, a party who does any act inconsistent with the supposition that he continues to hold the other party to his part of the agreement will be taken to have waived it altogether. When a specific time is fixed for the performance of a contract, and is of the essence of the contract and is not performed by that time, but the parties proceed with the performance of it after that time, the right to suddenly insist upon a forfeiture for failure to perform within the specified time will be deemed to have been waived and the time for performance will be deemed to have been extended for a reasonable time. Such was the position which faced the sheriff who was being called upon to cancel the sale after it had been concluded. [14] In all the circumstances, the applicants have failed to show that the first respondent s title from the sale in execution can properly be challenged for the transfer to be set aside by reason of it having occurred in improper circumstances. Locus standi [15] Even if I were wrong in conclusions as I have reached earlier in this matter, I am of the view that the counter-application must fail for applicants lack of locus standi. Mr Mossop argued that the applicants have a direct and substantial interest in considering or evaluating whether the sale was conducted in accordance with the requirements of the law (2) SA 367 at 373D-F 7

8 Once the property had been attached it was placed beyond the reach of the applicants. In Liquidators Union and Rhodesia Wholesale Ltd v Brown & Co. 8 Kotze JA stated: An arrest effected on property in execution of a judgment creates a pignus praetorium or to speak more correctly, a pignus judiciale, over such property. The effect of such a judicial arrest is that the goods attached are thereby placed in the hands or custody of the officer of the court. They pass out of the estate of the judgment debtor The basis of the applicants intervention is the first respondent s failure to furnish a bank or building society s guarantee within the period stipulated in the conditions of sale to secure the balance of the purchase price. It is not at all clear to me what prejudice such failure would occasion the applicants. If the first respondent would have failed to provide a guarantee or to make payment of the balance of the purchase price the property would simply be sold again by public auction after cancellation of the sale to the first respondent. The sheriff remained the proper person to deal with the first respondent s failure and if he thought that any breach would imperil the process of the sale in execution he would have had recourse to Rule 46(11). The applicants are no party to the contract of sale. Their intervention on the stated basis is an attempt to usurp the role of the sheriff. In the execution process the execution debtor has no role. In that regard in Sedibe and Another v United Building Society and Another 9 Eloff JP stated: Secondly, in a contractual setting, such as that with which we are here concerned, there is no room for the view that the former owners played any role at all. They were merely brought onto the scene by reason of the foreclosure. They had no right to control the course of events and they in fact took no part in the formulation of the conditions of sale. The fact that the former were at the time of the AD 549 at (3) SA 671 at 675I-676A 8

9 sale the owners of the property, is irrelevant. It affords no basis for the legal fiction that they were really disposing of the property. Conclusion [16] The applicants have no legal right to make claim to an order setting aside either the sale or the transfer of the immovable property to the first respondent. Having failed to establish a legal basis for setting aside of either the sale or the transfer of the property to the first respondent, the counter-application must fail, and the applicants in the main application must succeed. Order: [17] I accordingly make the following order: 1) (a) The first and second respondents and all persons occupying through them are ordered to vacate the immovable property situated at 36 Courtown Crescent, Erf 79, Avoca Hills, Registration Division FU, Province of KwaZulu-Natal not later than 30 September 2008; (b) failing compliance with the order in paragraph (a) above, the sheriff is authorised and directed to eject from the said property the first and second respondents and all persons occupying the said property through the first and second respondents; (c) the first and second respondents are ordered to pay the costs of the application. 2) (a) The counter-application is dismissed; (b) the applicants are to pay the costs of the first and second respondents in the counter-application. Date of Hearing: 21 May

10 Date of Judgment: 9 September 2008 Main Application: Counsel for the first applicant: Instructed by: Counsel for the first respondent: Instructed by: Adv D Naidoo Bux and Associates c/o Shaukat Karim & Company Adv R Mossop Mooney Ford Attorneys Counter-Application: Counsel for the first applicant: Instructed by: Adv R Mossop Mooney Ford Attorneys Counsel for the first respondent: Instructed by: Adv D Naidoo Bux and Associates c/o Shaukat Karim & Company Counsel for the second respondent: Instructed by: Adv J F Nicholson Ndwandwe & Associates 10