Sheriff of the High Court v Elizabeth Read and Windward Capital (Private) Limited

### Preamble
1
HB 249/22
HC 1743/20
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SHERIFF OF THE HIGH COURT

Versus

ELIZABETH READ

And

WINDWARD CAPITAL (PRIVATE) LIMITED

IN THE HIGH COURT OF ZIMBABWE

KABASA J

BULAWAYO 19 AND 29 SEPTEMBER 2022

Opposed Application

M. Mpofu, for the applicant

J. Tshuma, for the claimant

T. Mpofu, for the judgment creditor

KABASA J: 	These are interpleader proceedings in which the property which was attached by the applicant to satisfy a debt owed to the judgment creditor and for which the judgment creditor obtained judgment was claimed by the claimant.

The background facts are these: - Elizabeth Read “claimant” was married to Adrian Paul Hoyland Read “judgment debtor.”  The two divorced on 15th December 2011 and the judgment debtor was awarded Stand 604 Victoria Falls as his sole property.  The property was registered in the claimant’s name and in a consent paper which was incorporated into the court order, the claimant was ordered to effect transfer to the judgment debtor within 3 months of the granting of the decree of divorce.

Such transfer was not effected.  In 2017 the judgment creditor obtained judgment against the judgment debtor.  The debt was for US$617 661, 03 and such order was granted under HC 12979/16.  A writ of execution was subsequently issued and the applicant attached Stand 604 Victoria Falls Township.

The claimant laid a claim to that property resulting in the issuance of the interpleader notice.

The applicant initially erroneously referred to the property as Stand 598 and upon receipt of the judgment creditor’s opposition, filed an answering affidavit in which he corrected the error stating that the property being contested was Stand 604 not 598.  This necessitated an application by the judgment creditor for leave to file a supplementary opposing affidavit which leave was granted, allowing the judgment creditor to respond to the issue relating to Stand 604.

The earlier opposition to the claimant’s claim had zeroed in on the description of the property and a point in limine had been taken challenging the validity of the interpleader notice, in that it did not state the nature of the property claimed.  This point in limine was subsequently abandoned.

In opposing the claimant’s claim the judgment creditor took issue with the fact that there was nothing indicating the claim laid by the claimant.  The claimant had not filed an affidavit claiming such property necessitating the issuance of the interpleader notice.

In the supplementary opposing affidavit the judgment creditor accepted that Stand 604 Victoria Falls is still registered in the claimant’s name. Jene Antonette Meyer, a director of the judgment creditor and the deponent to the opposing affidavit contended that this property is not beneficially or substantively owned by the claimant but by the judgment debtor.  The claimant’s ownership having been divested by virtue of the divorce settlement.  The failure to take transfer was merely meant to avoid costs of transfer.  The claimant is therefore colluding with the judgment debtor in order to save the property.

John Stewart Matthews Gardiner also deposed to an affidavit wherein he confirmed that he formally undertook liability in favour of the judgment creditor for the due performance by the judgment debtor of the obligation arising out of a loan of US$500 000 advanced to the judgment debtor by the judgment creditor.  In undertaking such liability he had satisfied himself that 604 Victoria Falls was owned by the judgment debtor.  This assurance was obtained from the claimant who he spoke to over the phone on 10th October 2017.  He has known the claimant for many years and she allowed her partner, Mr. Chris Warden to confirm that indeed the property was owned by the judgment debtor.

Mr. Gardner’s wife also deposed to an affidavit confirming that Mr. Gardiner had indeed spoken to the claimant concerning ownership of Stand 604 Victoria Falls.

The judgment creditor’s contention was therefore that Stand 604 is executable as the owner is the judgment debtor and not the claimant.

On her part the claimant deposed to an affidavit laying claim to Stand 604 by virtue of the title she has under Deed of Transfer No. 1777/2011.

She was informed of the attachment of this property by the judgment debtor as she never received notice of such attachment.  Stand 604 was to be transferred to the judgment debtor as per the divorce decree but they agreed that the property be transferred to their children at a later date.  The judgment debtor then waived his personal right to take transfer.

She was not aware as to why her former husband used her property to secure his debt and why the judgment creditor did not perform due diligence as regards ownership of the property.  Her former husband could not pledge the property and she had occasion to confront him concerning his dealings with the house whereupon he showed her an affidavit pledging the property in question and made a clean breast of “things”.  The property cannot be sold in execution to satisfy a debt she was not party to.  The attachment was therefore wrong.

The claimant prayed that the property be declared not executable.

In interpleader proceedings the claimant bears the onus to prove that the property which is the subject of attachment belongs to them.  The onus is discharged on a balance of probabilities.  (Phillips N.O v National Foods Ltd and Anor 1996 (2) ZLR 532, Deputy Sheriff, Marondera v Traverse Investments (Pvt) Ltd and Anor HH 11-03, Bernstein v Visser 1934 CPD 270).

Has the claimant proved that the attached property belongs to her and ought to be declared non executable?

Mr. Tshuma, for the claimant, argued that the judgment debtor was aware at the time he borrowed the money for which judgment was obtained against him, that the property belonged to the claimant.  The supposed pledge was a nullity as such can only be entered into in relation to movable property.  No surety bond was registered with the Registrar of Deeds so as to encumber the claimant’s property.  Had that been done, the judgment creditor would have been expected to fore-close the security so registered and cite the owner of the property as a co-defendant, allowing the surety to defend the fore-closure.  The court order is against the judgment debtor not the claimant who is the registered owner of the property.  The court order does not make the property executable and so the writ is defective to the extent that it sought to attach a property that was not put up as security and which was not declared executable in the order of the court, which order is sought to be enforced by the judgment creditor, so argued Mr. Tshuma.

The foregoing argument constituted what counsel referred to as the first rung of the argument.  The second rung related to the fact that Stand 604 is owned by the claimant.  Section 14 of the Deeds Registries Act, Chapter 20:05 specifically provides for the transfer of real rights.  Where that is not done, no one can claim such rights.  The judgment debtor only acquired personal rights by virtue of the divorce decree, which personal rights the judgment debtor has not enforced since 2011, demonstrating that he waived such rights as asserted by the claimant.

Mr. T. Mpofu, for the judgment creditor held a different view.  The thrust of counsel’s argument is that the matter is not about pledges or security but whether Stand 604 can be attached to satisfy a debt owed by the judgment debtor.

The registration of title is not conclusive proof of ownership.  The judgment debtor did not depose to an affidavit in support of what the claimant asserted in her affidavit.  The claimant did not file an answering affidavit addressing the issues raised in the judgment creditor’s supplementary opposing affidavit.  The judgment debtor beneficially owns Stand 604 and the judgment creditor became aware of this property through the judgment debtor.

The claimant’s title to the property remained on paper but she was divested of same by the court order which awarded the property to the judgment debtor.  The parties could not vary a court order on their own.  If it had to be varied, it is the court which had the power to vary.  The reality of the situation is therefore that the property is the judgment debtor’s and section 14 of the Deeds Registries Act does not erode the rights given to the judgment debtor.  The delay in taking title does not change the court’s pronouncement as regards the owner of Stand 604.

The judgment creditor obtained an order sounding in money and is desirous to execute so as to realise that amount.  There is therefore no issue of pledge, but merely execution against the judgment debtor’s property, so argued Mr. Mpofu.

Counsel further argued that the claimant did not even state their claim on oath as there is nothing that stated such claim for the applicant to then issue the interpleader notice.  Equity demands that the property be sold as the judgment creditor is entitled to recover his debt against a recalcitrant judgment debtor.

The foregoing encapsulates Mr. Mpofu’s argument.  Counsel also asked for punitive costs contending that the judgment creditor has been put out of pocket trying to enforce a 2017 judgment which enforcement has been frustrated by the claimant whose sole objective is to assist a recalcitrant debtor.

I am persuaded by Mr. Mpofu’s argument.  This is why. Whilst it is accepted that one who has title has real rights and that such title is obtained through registration as provided for by section 14 of the Deeds Registries Act, Chapter 20:05, in The Sheriff of the High Court v Madziro and 3 Ors HH 339-15 TSANGA J had this to say:-

“… A party who has been ordered to transfer title to certain property and continues to hold onto such title following a divorce order … only continues to hold that title on behalf of its true owners.  Ownership of the property will have passed by the granting of the divorce order where the consent paper divesting the party with ownership will have been made an order of the court.  Whilst the Deeds Registry Act (Chapter 20:05) does indeed dictate in section 14 that ownership is conveyed from one person to another by means of a Deed of Transfer and certain procedures have to be observed in practice to realise transfer, delay in so doing does not erode an order of the court that has effectively ordered transfer of an asset from one person to another.  As argued on behalf of the claimants the change of title in such circumstances is in reality the final stage in giving effect to the order granted.”

Mr. Tshuma submitted that this court should not follow the decision in the Madziro case (supra) because it was wrongly decided. I do not agree. The Madziro case (supra) simply states that the court will look at the reality of the matter to determine who owns property and not merely rely on who has title.  Whilst prima facie the one who has title is deemed to be the possessor of real rights over such property, such title is not conclusive proof of ownership, the circumstances of the matter cannot, in deserving cases, be ignored. This is one such case.

In CBZ Bank Limited v David Moyo & Anor SC 17-18 the court had this to say:-

“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 237 B-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.  …  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 matter is therefore not resolved by the mere assertion that the claimant has title.  The exposition of the law in Fryes (Pvt) Ltd v Ries 1957 (3) SA 575 to the effect that there should not be any doubt as to the ownership of the persons in whose names real rights are registered and in Takafuma v Takafuma 1994 (2) ZLR 103 (S) to the effect that the registration of rights in immovable property in terms of the Deeds and Registries Act is not a mere form but substance as it conveys real rights upon the one in whose name the property is registered, cannot be gainsaid.

However sight must not be lost of the fact that this is not a case of the judgment debtor incurring a debt, the judgment creditor obtaining judgment and simply seeking to execute on a 3rd party’s property.  Were this the case Mr. Tshuma would be correct to say you cannot seek to attach a 3rd party’s property to satisfy a debt which such party is not responsible for. The circumstances of this case however, are that this property was awarded to the judgment debtor by order of court which order is extant.  The court order was not varied and Mr. Mpofu makes the point, correctly so, that an order of court is not varied by the parties but by the court.  (Commercial Farmers Union v Mhuriro and Ors 2000 (1) ZLR 405)

It can therefore not be argued that Stand 604 was now to be transferred to the judgment debtor’s children and so the judgment debtor no longer had any beneficial and substantive interest in it.  The court order specifically stated that this property was to be transferred to him.  Not only that but the judgment debtor has not controverted the point made by Mr. Gardiner that he confirmed ownership of this property.  The claimant on her part did not file an answering affidavit, which she could have had she been so inclined, controverting Mr. Gardiner’s assertion that she confirmed that Stand 604 was the judgment debtor’s. The claimant can therefore not blow hot and cold, confirming ownership by the judgment debtor in one breath and in the same breath disputing same to suit her own purposes and I dare say the judgment debtor’s.

Is this case any different to the circumstances in Moyo v Muwandi SC 47-03? In that case the judgment debtor had sold his rights, title and interest in a property to Muwandi who had bought the property and paid for it in full but before transfer of ownership that property was attached by a judgment creditor and sold. Muwandi challenged the transfer of that property to the judgment creditor and the Supreme Court held that Muwandi had shown special circumstances why right title and interest in the property he had bought but was yet to take transfer should not have been sold to satisfy the judgment creditor’s claim against the judgment debtor.  I do not see any difference.

In that case council officials had delayed in attending to the transfer of the property to Muwandi and so the property was still in the judgment debtor’s name when it was attached and sold. In casu the court ordered the transfer of 604 Victoria Falls to the judgment debtor but such transfer had not been effected.

Can it be argued that because Muwandi had acted promptly in seeking transfer and had also moved into the house long before the attachment, the circumstances are to be distinguished from the ones in casu?

Granted the divorce order was granted on 15th December 2011 and the judgment debtor had not sought transfer of Stand 604 as per the court order.  The judgment creditor obtained judgment against the judgment debtor by order of the court of 14 July 2017 and the writ was issued on 29 June 2018, about 6 or so years later.  The issue however is that the judgment creditor was not aware of this and became aware when the judgment debtor brought the ownership of this property to its attention.  It can therefore not be said there was no prompt action from the judgment creditor. The judgment debtor and the claimant confirmed the ownership of the property as per the extant court order, lulling the judgment creditor into a false sense of security, only to seek to pull the rug from under the judgment creditor’s feet when it sought to execute against the property. Allowing such would not be just and equitable.

Just as Muwandi was adjudged to have shown special circumstances justifying the setting aside of the sale of the property he was yet to get transfer of, so too has the judgment creditor in casu shown special circumstances to justify attaching property whose title was in the judgment debtor’s former wife.

The claimant did not refute claims of ownership when asked by Mr. Gardiner.  She therefore cannot be heard to hide behind her title in order to frustrate a creditor who wishes to recover a debt owed by her former husband through the sale of a property awarded to that former husband in a divorce settlement.

Mr. Tshuma took issue with the fact that this property was not declared executable in the court order.  I find no merit in such an argument.  The order was for payment of US$617 661, 03.  The writ of execution authorized the applicant to attach the movable goods of the judgment debtor to realise this amount but should such goods not be sufficient the applicant was to attach Stand 598 and Stand 604.  The attachment was for the purposes of satisfying the amount on the writ. In any event such an issue cannot be raised by a claimant in interpleader proceedings. All such claimant is expected to address is the claim to the attached property as that is the only bases for their involvement in the matter, whose merits or lack thereof they cannot speak to. If it was to be raised it ought to have been raised by the judgment debtor.

It therefore did not require a court order specifically ordering Stand 604 specially executable.  Just as it did not require the order to state how the US$617 661, 03 was to be realised.  The court order simply spoke to the amount of the debt and that sufficed.  In seeking to execute so as to realise this amount the judgment creditor sought the attachment of whatever property was available to meet that debt, in terms of the court order

In Deputy Sheriff Harare v Moyo HH 640-15 MUREMBA J found that special circumstances existed justifying an order in favour of a claimant who had purchased an immovable property from a judgment debtor who, together with his wife owned the house which was subsequently attached by a judgment creditor before transfer was effected into the claimant’s name.  The judgment creditor had argued that since title was in the judgment debtor’s names the attachment was lawful as the claimant only had personal rights and not real rights in the property.

In finding for the claimant the learned Judge had this to say:-

“However, considering the circumstances of the present case, it is my considered view that this is one case where it can be said that there are special circumstances justifying the court to find in favour of the claimant.  Equity (fairness and justice) demands that judgment be entered in favour of the claimant.  The claimant has set out facts and allegations which show that save for the registration of the property into his name from the judgment debtor and her husband, the claimant did everything else which a purchaser of an immovable property is expected to do.”

By parity of reasoning, the fact that the judgment debtor in casu had not taken transfer did not change the effect of the court order upon which he acted by representing to the judgment creditor that he owned the property, which was confirmed by the claimant who holds title to the property which she was ordered to transfer to the judgment debtor.

The claimant made her bed and she must lie on it.  She cannot now seek to save the property at the expense of the judgment creditor.  It is being disingenuous on her part to claim the property by virtue of her having title and at the same time say the property is to be transferred to the children because the judgment debtor agreed to such an arrangement and so waived his rights to take transfer. Why would the judgment debtor have a say in how the property was to be handled if not because he had been awarded such property and it was to all intents and purposes his? If the claimant regarded the property as hers why would she allow the judgment debtor to have a say over that property if not because she knew she had been divested of such ownership by order of court. This is precisely why she confirmed that the judgment debtor was the owner of the property at the time Mr. Gardiner sought to confirm the true owner of Stand 604. Equally, notice of such attachment would have been given to the claimant had she claimed that property, which she could not as she knew the property had been awarded to the judgment debtor. She cannot be allowed to collude with the judgment debtor in order to save this property at the expense of the judgment creditor.

The issue of pledge or registration of a surety bond does not arise.  The judgment creditor’s case hinges on the ownership of the property by virtue of the divorce order and the representations made by both the judgment debtor and claimant.

The claimant’s claim to this property is not supported by the circumstances of this case. This property is the judgment debtor’s and the issue of title must be looked at in light of the circumstances.

I am of the considered view that there are special circumstances justifying granting judgment in favour of the judgment creditor.

Mr. Mpofu had also raised an issue regarding the validity of the interpleader notice because there was nothing presented to the applicant to justify the issuance of the notice.  Given the manner in which I have resolved this matter, I find no useful purpose in exercising my mind on this point.

As regards costs whilst the claimant can be said to have been somewhat deceitful in her conduct, I am not persuaded to mulct her with punitive costs.

The desire to save this property from execution is not in itself mala fide or deserving of censure.

In the result I make the following order:-

1.	The claimant’s claim to Stand No. 604 Victoria Falls Township placed under attachment in execution of judgment HC 12797/16 granted at the High Court in Harare is hereby dismissed.

2.	Stand 604 Victoria Falls Township set out in the notice of attachment dated 29th June 2018 issued by applicant is declared executable.

3.	The claimant shall pay the costs of the judgment creditor and the applicant.

Coghlan and Welsh, applicant’s legal practitioners

Webb Low & Barry, claimant’s legal practitioners

Atherstone & Cook c/o Calderwood, Bryce Hendrie & Partners, judgment creditor’s legal practitioners