Manifesto Trading (Pvt) Ltd t/a Smart Pak & Ors v The Sheriff of the High Court of Zimbabwe N.O. & Ors

### Preamble
1
HB 230/22
HC 439/20
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MANIFESTO TRADING (PVT) LTD t/a SMART PAK

And

RABBIT INVESTMENT (PVT) LTD

And

HENRY SHONAI TODZANAI

And

ZANELE NDLOVU

Versus

THE SHERIFF OF THE HIGH COURT OF ZIMBABWE N.O.

And

OWEN TOMA

And

STANDARD CHARTERED BANK ZIMBABWE LIMITED

IN THE HIGH COURT OF ZIMBABWE

DUBE-BANDA J

BULAWAYO 27 JULY 2022 & 8 SEPTEMBER 2022

Opposed court application

S. Siziba for the applicants

Ms. P. Dube for the 3rd respondent

DUBE-BANDA J:

Introduction

This is an application to set-aside the decision of the Sheriff in terms of rule 359(8) of the High Court Rules, 1971. The applicants seek an order couched in the following terms:-

That the decision of the 1st respondent confirming the sale of the applicants’ property to the 2nd respondent in terms of his ruling dated the 22nd of January 2020 be and is hereby set aside.

Any of the respondents who opposes (sic) this application shall pay the costs on a legal practitioner and client scale.

The decision of the 1st respondent is sought to be set-aside on three grounds, which are the following:

That the 1st respondent convened and conducted a hearing in terms of rule 359(7) of the High Court Rules, 1971 on the 18th December 2019 and confirmed the sale in execution without notifying the applicants’ to attend same as mandated by the rules and principles of natural justice and (sic) hence his decision must be set aside.

The 1st respondent misdirected himself and also failed to appreciate the weight of the evidence placed before him in coming to the conclusion that the applicants’ had not paid fully (sic) their debt to the 3rd respondent.

The 1st respondent grossly misdirected himself in confirming the sale in execution when it was clear that the purchase price of ZWL350 000.00 for a house at the up market suburb of IIanda, Bulawayo was unreasonably low under whatever circumstances.

The 3rd and 4th applicants are husband and wife and directors of the 1st applicant as well as trustees in the 2nd applicant which is wholly owned by the 1st applicant. The applicants are judgment debtors and the 3rd respondent is the judgment creditor. The 1st respondent is the Sheriff who conducted a sale in execution and declared the 2nd respondent the highest bidder and confirmed the sale.

This application is opposed by the 3rd respondent. The 1st and 2nd respondent did not file opposing papers nor did they participate at the hearing of this matter. I take it that they have taken a position to abide by the decision of this court.

For the sake of convenience and where the context permit the parties shall be referred to by their names.

Background facts

This application will be better understood against the background that follows. On the 18th June 2015, the 3rd respondent obtained a default judgment for the sum of US$ 18 543.15 together with interest at the rate of 25% per annum and costs on a legal practitioner and client scale against the applicants. It is clear from the papers that the 1st respondent placed the applicants’ immovable property namely Stand 11075 Bulawayo Township of Bulawayo Township lands measuring 1603 square metres and held under Deed of Transfer No. 2440/2005 (the property) under judicial attachment. On two occasions the 1st respondent sold the property by public auction and on one occasion by private treaty. On these three occasions the applicants objected to the sale of the property claiming that the prices realised were unreasonably low. The objections were successful.

On 4 March 2019 the court ordered the 1st respondent to conduct a fresh sale of the property within ninety days in terms of rule 358 of the High Court Rules, 1971. The 1st respondent sold the property by private treaty for the sum of ZWL350 000.00 to the 2nd respondent. On 30 October 2019 the applicants filed with the 1st respondent an objection in terms of rule 359 of the High Court Rules, 1971. The grounds of the objection were that the judgment debt had been paid in full on the17 October 2019 and that the property was sold for an unreasonably low price. On the 22nd January 2020 the 1st respondent dismissed the objection and confirmed the sale by private treaty to the 2nd respondent.

Aggrieved by the dismissal of the objection the applicants filed this application on the 24 February 2020. In Manifesto Trading (Pvt) Ltd t/a Smart Park & Ors v The Sheriff of Zimbabwe & Ors HB 150/20 this court found per MAKONESE J that the 1st respondent’s conduct in failing to notify the applicants of the date of the hearing was irregular and a misdirection. It was found further that the ruling of the 1st respondent did not conform to the law and could not be allowed to stand. It was then ordered that: the decision of the 1st respondent confirming the sale of the applicants’ property to 2nd respondent in terms of the ruling dated 22nd January 2020 be and is hereby set aside; the 1st respondent is directed to conduct a fresh hearing; and that there shall be no order as to costs.

Standard Chartered Bank was aggrieved by the decision of the High Court and filed an appeal to the Supreme Court. The Supreme Court ordered as follows: that the appeal is allowed with costs; that the judgment of the court a quo is set aside; and that the matter is remitted to the court a quo for determination on the merits. It is against this background that this application is before this court.

The confirmation of the sale of the property to the 2nd respondent is sought to be set aside on three grounds. I now deal with each ground in turn.

Failure to notify the applicants of the date of the hearing

Mr Siziba counsel for the applicants submitted that the main contention was that Sheriff convened and conducted a hearing without notice to the applicants. It was submitted that the failure to give the applicants notice of the hearing was in breach of rule 359 (7) (a) of the High Court Rules, 1971 and also violated the common law principle of audi alteram partem. Counsel argued that the applicants were prejudiced by the failure to attend the hearing in that they had intended to produce a valuation report of the property. It was argued that the prejudice was that the absence of the valuation report was relied upon by the Sheriff in rejecting the contention that the purchase price was unreasonably low. Counsel submitted that the issue of failure to notify the applicants of the date of the hearing related to the merits of this application.

Ms. Dube counsel for the 3rd respondent submitted that the Supreme Court remitted this matter to this court for it to be determined on the merits. Counsel argued that dealing with the matter on the merits meant determining it on the grounds of objection provided for in rule 359 of the High Court Rules, 1971. Counsel submitted further that the mandate to determine the matter on the merits does not include the mandate to deal with the technical point of whether there was a failure to notify the applicants of the date of a hearing.

My view is that this court’s mandate to determine this matter is derived within the four corners of the Supreme Court order.  The Supreme Court remitted this matter to this court for determination on the merits and no more. The internet dictionary defines the phrase “on the merits:”

To refer to a judgment, decision or ruling of a court based upon the facts presented in evidence and the law applied to that evidence. A judge decides a case "on the merits" when he/she bases the decision on the fundamental issues and considers technical and procedural defences as inconsequential. (My emphasis).

The contention that the sale must be set aside on the basis that the Sheriff violated the rules of natural justice in failing to notify the applicants of the set down date does not speak to the merits of the matter. The contention that the Sheriff violated the principles of natural justice speak to the general grounds of review not the merits. Ms Dube submitted that the jurisdiction to determine the matter on the merits does not include the mandate to deal with the technical point of whether there was a failure or not to notify the applicants of the date of a hearing. I agree. The issue of technical procedural deficiency does not relate to the merits.

I take the view that in this application this court has no mandate to deal with what is clearly a ground of review turning on the notification of the date of set down. Mr Siziba argued that this issue relates to the merits of the matter. I disagree.  The issue of notice is a ground for review. It is not concerned with the merits of the decision but whether the decision was arrived at in an acceptable fashion. It is about the process and the way in which the Sheriff came to the challenged conclusion. It is not concerned about the merits but whether the rules of natural justice were observed. The mandate of this court is to deal with the merits of this matter and the merits excludes the issue of procedural irregularity contended by the applicants. The issue of notice is outside the mandate on which the Supreme Court remitted this matter to this court.  The matter was remitted to be dealt with on the merits and nothing else. See: Syatimbula v City of Victoria Falls SC 88/22. In the circumstances, I decline to determine the issue regarding failure of the Sheriff to serve the applicants with a set down. It is inconsequential in this application.

Did the applicants fully pay the judgment debt?

In the founding affidavit the applicants aver that the Sheriff erred in confirming the sale when the facts before him indicated that the 3rd respondent had been paid in full the judgment debt. The contention is that on the 3rd October 2019 the balance of the capital debt was $859.27 and on the 28 October 2019 the applicants paid the 3rd respondent the sum of $900.00 thus clearing the debt. In the written heads of argument the applicants contend that they had paid the judgment debt in full.

In his oral submissions Mr Siziba submitted that this matter turns on the principle of equity, in that the court must engage in a balancing exercise i.e. to balance the interest of the creditor, debtors and the purchaser of the property. Regarding the purchaser it was argued that he has not opposed this application and therefore he is not contesting the relief sought by the applicants. In respect of the 3rd respondent it was argued that it being the judgment creditor it had been paid in full and it will suffer no prejudice if the sale is set aside. This submission was anchored on a payment of RTGS 25 000.00 made on the 1st July 2020. It was submitted further that the balance of equity favours the applicants who stand to lose a home under the circumstances where they have paid the judgment debt.  Counsel conceded that the payment of the 1st July 2020 was made after the sale had been confirmed and that such payment cannot be a basis for the setting aside a sale. Counsel submitted further that on the basis of equity and the need to balance up the interest of all the parties it will not be in the interest of justice to allow a sale in execution to stand in the circumstances where the judgment creditor has been paid in full.

In the opposing affidavit the 3rd respondent disputed confirming settlement of the judgment debt. It was averred that the applicants did not pay the interest as per the court order. In its heads of argument the 3rd respondent contend that the applicants have failed to show that they have settled the judgment debt in HC 3512/15. It was submitted further that the fact that the applicants only started claiming to have settled the judgment debt in October 2019 (long after the period which had been stipulated in HC 10009/18 had expired) shows that applicants’ claim of payment was untruthful and baseless. Ms Dube submitted that the principle of balance equities had no application in this matter.

Mr Siziba argued that the 2nd respondent (the purchaser) has not opposed this application may be taken that he is not to contesting the relief sought by the applicants. This argument loses sight of the fact that this application is opposed by the 3rd respondent. I take the view that the fact that the purchaser is not opposing the application is of no moment. The application remains opposed.

Mr Siziba argued at length on the principle of equity and contended that on the circumstances of this case the equities favour the applicants and the setting aside of the sale.  In Kanoyangwa v The Messenger of Court SC 68/06 the court said:

Given the situation outlined above, the determination of this dispute, in my view, requires that the interests of the appellant on one side, be balanced against those of the respondents, on the other.   In other words, the case must be determined on the basis of equities and balance of convenience. This is what I shall proceed to do.

I agree that in a proper case the court should properly have regard to considerations of equity. In Kona & Ors v Mudzingwa & Ors 2002 (2) ZLR 531 (S) the discretion of the court is therefore a wide one and in the exercise thereof the court can and should properly have regard to equitable considerations.

Mr Siziba submitted that the fact that the debt has been paid in full is a material consideration which tilts the equities in favour of the applicants. The contention of full payment is contested and with justification in my view.  I say so because in their founding affidavit the applicants aver that they paid in full the judgment debt on the 28 October 2019. Proof of payment in the sum of ZWL 900.00 is produced.  If this was indeed so there would have been no justification to pay another RTGS25 000.00 on the 1st July 2020. It is clear that the averment that full payment was made in October 2019 was incorrect.

The sale was confirmed on the 22nd January 2020 and the applicants made a payment of RTGS25 000.00 on the 1st July 2020.  The payment was made approximately six months after the confirmation of the sale. Mr Siziba conceded that the payment of the 1st July 2020 was made after the sale had been confirmed and that such payment cannot be a basis for the setting aside a sale. I do not accept that a litigant can after the confirmation of the sale make a unilaterally payment and run to court waving that payment to seek to set aside a confirmed sale. In Nanhanga v Chalmers & Ors 2014 (2) ZLR 46 (H) it was held that where a debtor manages to settle the debt after the sale but before confirmation of the sale by the Sheriff, he may apply to court to have the debt cancelled. The odds are in his favour at that stage and this is a good ground for having the sale set aside. Where the sale has been confirmed by the Sheriff, the sale is no longer conditional. The transaction becomes perfecta and the sale is sealed. The purchaser acquires rights which can only be upset by a court of law. The approach of the courts is that judicial sales are not to be readily interfered with after they have been confirmed. The fact that the judgment debtor has subsequently satisfied the judgment debt does not automatically invalidate the sale. Ms Dube submitted that at the time the applicants purported to pay the judicial process was complete and that such payment is not a ground for setting aside a sale. I agree.  In any event the authenticity of the payment is itself disputed with justification.

The applicants are the authors of their own misfortune. The judgment was obtained on the 4th March 2015. It is now just over seven years from the date the judgement against them was granted. The property was sold twice by public auction and once by private treaty. The evidence shows that these sales were set aside at the instance of the applicants.  This sale was confirmed on the 22nd January 202, this confirmation followed yet another objection filed with the Sheriff in October 2019.

The applicants did not take advantage of the window of opportunity presented by the setting aside of the first two sales by auction and one sale by private treaty to pay the judgment debt or seek to sell the property by private treaty. On 4 March 2019 the court ordered the Sheriff to conduct a sale by private treaty of the property within ninety days. The applicants did not take advantage of that window of opportunity to bring a buyer offering a higher price. The observation made in Morfopoulos v Zimbank Limited & Ors 1996 (1) ZLR 626 (H) at p 634D applies to this matter with equal force. It was said:

All too frequently, however, the debtor finds himself in an invidious position relating to the loss of his case precisely because of his own failure to address the problem efficiently at an early stage.   Where his own tardiness or evasion has contributed to his problems, a debtor cannot hope to persuade a court that equitable relief is his due.

I juxtapose all this with what was said in Lalla v Bhura 1973 (2) RLR 280 that:

If the courts were over ready to set aside sale in execution under rule 359, this might have a profound effect upon the efficacy of this type of sale. Would-be purchasers might well be deterred from attending and bidding if they considered their efforts might easily be frustrated by an application under rule 359, as a general principle I think it should be accepted that a court will not readily interfere in these matters.

The applicants must have been aware of the attachment of their property in execution in 2015, and failed to speedily move to mobilize funds to pay off the debt and protect their interests. I find in the circumstances of this case that in weighing applicants’ interests against those of the judgment creditor and a bona fide purchaser of the property (although he has not opposed this application), and also that the sale has been confirmed that the equities clearly favour the judgment creditor.   Put differently, the equities favour allowing the sale to stand.

Was the purchase price unreasonably low price?

The applicants aver that in terms of the evaluation report attached to this application the open market value of the property was ZWL2 000 000.00 and the property was sold for ZWL350 000.00. It is said the difference between the purchase price and the market value is ZWL1 650 000.00. It was averred further that the property is located in an up market suburb and the purchase price of ZWL350 000.00 could not even buy a two roomed house in the high density suburbs.  It was averred that the purchase price was unreasonably low and this court should not allow such to stand.

In the heads of argument it was contended that the question whether a purchase price is unreasonably low or not is a question of fact which turns on the evidence adduced before court and the market trends. The applicants rely on the evaluation report to show that the purchase price was unreasonably low. The applicants concede that the evaluation report is not on oath and the point is made that such affects its weight not admissibility. Mr Siziba submitted that notwithstanding the fact that the valuation report is not under oath it still remains an expert opinion which is persuasive to this court.

The 3rd respondent in the opposing affidavit avers that the 2nd respondent did not bid for the property since it was sold by private treaty. It was averred further that the 2nd respondent offered the highest price and no other potential purchaser offered a higher price than ZWL350 000.00. It was averred that in terms of the order in HC 1009/18 the property had to be sold within ninety days from the date of the order and the applicants failed to find a potential buyer who was willing to pay more than $350 000.00 during that limited period. It was averred further that the fact that the applicants failed to find a potential purchaser willing to pay a higher price for the property is evidence that it could not fetch anything higher that the $350 000.00 offered by the 2nd respondent.

In the heads of argument the 3rd respondent contends that the applicants seek to rely on an unsworn valuation report which is not permissible at law. Ms Dube submitted that the evaluation report was not on oath and was not evidence and it does not change anything. Counsel argued that the valuation report is in local currency and it does not predate the sale nor contemporaneous with it. Counsel submitted further that there was no evidence that the price was unreasonably low.

It is trite that the courts will not readily interfere with judicial sales in execution, in order to protect the efficacy of such sales, especially after confirmation and transfer. See: Kanoyangwa v The Messenger of Court SC 68/06. In Mapedzamombe v Commercial Bank of Zimbabwe and Anor 1996 (1) ZLR 257 (S) GUBBAY  CJ set out the basis on which a sale in execution might be set aside, and at 260 C-G said:

Before a sale is confirmed in terms of r 360, it is a conditional sale and any interested party may apply to court for it to be set aside.   At that stage, even though the court has a discretion to set aside the sale in certain circumstances, it will not readily do so.   See Lalla v Bhura1973 (2) RLR 280 (A) at 283 A-B.   Once confirmed by the Sheriff in compliance with r 360, the sale of the property is no longer conditional.   That being so, a court would be even more reluctant to set aside the sale pursuant to an application in terms of r 359 for it to do so.   See Narran v Midlands Chemical Industries (Pvt) Ltd S-220-91 (not reported) at pp 6-7.   When the sale of the property not only has been properly confirmed by the Sheriff but transfer effected by him to the purchaser against payment of the price, any application to set aside the transfer falls outside r 359 and must conform strictly with the principles of the common law. (My emphasis).

In Morfopoulos vs ZIMBANK 1996 (1) ZLR 626 (H) the court said that generally speaking, courts should not readily interfere in sales in execution. In casu the sale was been confirmed by the Sheriff. The sale of the property is no longer conditional.  That being so, a court would be even more reluctant to set aside the sale pursuant to an application in terms of rule 359.   The valuation report is not sworn to.  This affects its weight.  I take the view that the valuation report though admissible is of no weight. Further the report speaks to the market value of the property as at 4 December 2019, when the property had long been sold to the 2nd respondent. Ms Dube submitted that the valuation report is in local currency and it does not predate the sale nor contemporaneous with it. I agree. Further the report is an opinion of a valuation and must be of considerably less value than definite information about the price actually offered for the property in bona fide private treaty. See:  Zimunhu vs Gwati & Others SC-43-02. This valuation report was not even placed before the Sheriff when the applicants filed the objection.

In HC 1009/18 the court ordered that the property be sold by private treaty within ninety days. The applicants did not produce a potential buyer who was in a position to pay more than ZWL350 000.00 offered by the 2nd respondent. DUBE J in Chikwavira v The Sheriff of Zimbabwe & Anor HH357/13 said that:

The debtor was given an opportunity to bring a buyer offering a higher price and the failure to do so is due to the fact that there were no buyers in the market willing to pay the price suggested by the judgment debtor.

This observation applies with equal force in this case. The applicants had a period of ninety days to introduce to the Sheriff a potential buyer who was prepared to pay the ZWL2 000 000.00 that they are fronting in this application. The fact that they did not do so shows that they were no buyers in the market willing to pay that kind of purchase price. The above observation must be juxtaposed with the jurisprudence that the courts should be generally slow to interfere in sales in execution. In the circumstances the contention that the property was sold for an unreasonably low price has no merit.

Disposition

I am of the view that Mr Siziba somehow euphemistically realised that first the argument based on equity arising from the alleged full payment of the purchase price and second the argument based on the contention that the price was unreasonably low did not have traction. I say so because counsel twice submitted that the major ground for seeking to set aside the sale was that the Sheriff did not give notice of set down to the applicants.

The 3rd respondent submitted that there must be finality in litigation. I agree. This case has a long and winding history wherein a beneficiary of a court judgment has not known peace since 2015.  The applicants have had ample time to either pay the debt or introduce to the Sheriff a potential buyer who was willing to buy the property at a higher price.  They have failed to do so.  There must be finality to this long standing case.  What has been done cannot be undone.

No case whatsoever was made either before the Sheriff or this court for the setting aside of the sale. It is for these reasons that this application must fail.

The general rule in matters of costs is that the successful party should be given its costs, and this rule should not be departed from except where there are good grounds for doing so. I can think of no reason why I should deviate from this general rule. I therefore intend awarding costs against the applicants. The 3rd respondent had sought costs on a punitive scale, no case has been made for such costs.

In the result, I order that:

The application be and is hereby dismissed.

The applicants jointly and severally each paying the other to be absolved pay the costs of suit.

Ncube & Partners applicants’ legal practitioners

Danziger & Partners 3rd respondent’s legal practitioners