Abigail Mutize v FMC Financial Services (Private) Limited & 4 Ors

### Preamble
Judgment No. SC 112/20
1
Civil Appeal No. SC 24/20
REPORTABLE
(104)
---------


REPORTABLE	(104)

ABIGAIL     MUTIZE

v

FMC     FINANCIAL     SERVICES     (PRIVATE)     LIMITED     (2)     REVESAI     TABETH     NYAHASHA     (3)     SHERIFF     OF     THE     HIGH     COURT     (4)     REGISTRAR     OF     DEEDS     (5)     POWER BREEZE     ENGINEERING     (PRIVATE)     LIMITED

SUPREME COURT OF ZIMBABWE

GWAUNZA DCJ, UCHENA JA & MATHONSI JA

HARARE: JUNE 30, 2020 & SEPTEMBER 14, 2020

Ms N. Musviva, for the appellant.

E. Chiwuta, for the first respondent.

F. Moyo, for the second respondent.

No appearance for the third, fourth and fifth respondents.

MATHONSI JA:	 The appellant’s house Number 9, 27th Avenue, Haig Park in Mabelreign Harare (the house) was sold in execution.  The appellant’s challenge of the sale in terms of the common law was dismissed with costs on the adverse scale by the High Court which then ordered her eviction, along with all those claiming occupation through her from the house.  This is an appeal against that whole consolidated judgement of the High Court.

After hearing submissions by counsel, this Court dismissed the appeal with costs.  The court indicated that the reasons for that outcome would follow.  These are they.

FACTUAL BACKGROUND

The appellant is one of the directors of the fifth respondent, a company which obtained a loan from the first respondent.  As security for the debt, the appellant put up her house and she also stood as surety and co-principal debtor for the due payment of the debt by the fifth respondent.

In due course, the fifth respondent defaulted as a result of which the first respondent took judgment in case number HC 7340/11.  In the fullness of time, the house was sold in execution by the Sherriff, the third respondent herein, the successful bidder being the second respondent herein.  She purchased the house for $115 500.00 at a public auction conducted by the third respondent.  The sale was confirmed on 31 May 2018.

Following the transfer of the house to herself by Deed of Transfer number 5886/2018, the second respondent brought an application in the High Court under case number HC 505/19, for the eviction of the appellant and those claiming occupation through her from the house.  Meanwhile, the appellant had, on 27 November 2018, also brought an application in the same court in HC 10930/18, for the setting aside of the sale of her house by public auction.

The basis of the application filed by the appellant for the setting aside of the sale by public auction was the alleged violation of the terms of the agreement of sale entered into between the Sheriff and the highest bidder.  The appellant alleged that, in terms of that agreement, the payment of the purchase price ought to have been made within seven days of the confirmation of the sale.  In the event of a failure to make payment aforesaid, the sale would be cancelled.

The appellant maintained that the purchase price was only paid 5 months after confirmation of the sale and that transfer had been effected prior to payment of the full purchase price.  For those reasons, the appellant sought a cancellation of Deed of Transfer number 5886/2018 in favour of the second respondent and the revival of Deed of Transfer 8554/89 in her favour. The first and second respondents opposed the application.

In case number HC 505/19, as I have said, the second respondent sought the eviction of the appellant and those claiming occupation through her, from the house.  This was a rei vindicatio in which the second respondent, as legal owner of the house, sought to vindicate against those in occupation of it.  The appellant also opposed the application for eviction disputing the second respondent’s claim of ownership.  She also asserted that the matter was lis pendens under case number HC 10930/18.

By order of the High Court granted on 7 May 2019, the two applications were consolidated and ordered to be heard at the same time by one judge.  At the hearing of the two applications, four preliminary issues were raised by the second respondent, namely that the appellant lacked locus standi in judicio to bring an application in terms of an agreement of sale entered into between the Sheriff and the second respondent on the basis of the doctrine of privity of contract.

Secondly, the second respondent submitted that there were material disputes of fact as could not be determined on the papers.  These related to the payment of the full purchase price, the appellant having suggested that a sum of $500.00 had not been paid.  In light of the disputed transfer of ownership, triable issues which could not be dispensed with on the papers had arisen.

Thirdly, the second respondent objected to the application for the setting aside of the sale which was only made after confirmation of the sale and transfer of the house to the second respondent.  She maintained that the application had been filed out of time and without seeking condonation.  Fourthly, the second respondent submitted that, to the extent that the application was one for review of the decision of the Sheriff, it did not comply with r 257 of the High Court Rules, 1971.  The application did not state concisely and clearly the grounds upon which the appellant sought to have the decision set aside.

The court a quo upheld the preliminary objections taken by the second respondent.  It found that upon realising that its challenge to the sale in terms of r 359 of the High Court Rules had not materialised because she had not acted timeously, she ought to have sought condonation instead of purporting to proceed in terms of the common law.  The court a quo also found that there was a fatal defect in the application in that the grounds for review were not set out.

On the question of locus standi to bring an application based on the Sheriff’s failure to cancel the agreement of sale when the purchase price was not paid on time, the court a quo found that it is only the Sheriff who had a right to sue for breach of the agreement, if any, and not the appellant.  For that reason, the appellant did not have locus standi to sue on a contract she was not party to.  The application for setting aside the sale was dismissed without considering its merits while the application for eviction was granted.  The court a quo found that the second respondent had a vindicatory right, as the registered owner, to take possession of the house.

The appellant was aggrieved by the decision of the court a quo.  She noted the present appeal.

GROUNDS OF APPEAL

The learned judge/court a quo erred at law in first delving and deciding the matter on the merits under one of the consolidated cases being HC 10930/18 by holding that full purchase price had been paid before transfer, and then went on to also decide on the points in limine and passed a ruling as if the appellant’s matter fell on the basis of the points in limine only as if the learned judge was dealing with a point in limine that there are material disputes of fact when there were none.

The learned judge/court erred at law in validating a sale in execution and applying in-applicable law in the circumstances where:

Purchase price was paid more than 5 months later after being declared the highest bidder when such payment was to be made in seven days.

Transfer passed to the purchaser, and payment followed after the purchaser was already holding a title deed.

Payment was made in instalments against the terms and conditions of the sale.

The learned judge/court erred at law in upholding a point in limine by the respondents that the application for setting aside a sale in execution ought to have complied with rule 257 of the High Court Rules, when it was apparent that the application had been brought in terms of common law.

The learned judge/court erred at law in upholding a point in limine by the respondents that the appellant ought to have sought condonation for late filing of the application for setting aside a sale in execution when the application had been brought in terms of common law, which can be filed any time, and is not regulated by any time limit.

The learned judge/court erred at law in upholding a point in limine by the respondents that the appellant had no locus standi to bring an application for setting aside a sale in execution, when it was apparent that the appellant was the judgment debtor and had an interest in the case.

The learned judge/court erred in granting the application for eviction of the appellant when there was no legal basis to do so, and applying inapplicable law in the circumstances.

It is apparent that these grounds of appeal are repetitive and are also not concise.  Ground two contains three sub grounds speaking to the same issues raised in ground one.  They all concern the issue of the purchase price having been paid late and after transfer had been effected.  In addition, both grounds one and two are not concise.

The same criticism applies to grounds three, four and five.  They attack the court a quo’s upholding of the points in limine raised by the second respondent.  Clearly the repetitive and wordy grounds of appeal infringe upon r 44 of the Supreme Court Rules, 2018.  This court has stated repeatedly that it is not its function to sift through numerous grounds of appeal looking for a possible valid ground of appeal in order to identify the real issues for determination.  Issues must be easily ascertainable upon a reading of the grounds of appeal.  See Chikura and Anor v Al Shams Global BVI Limited and Anor 2017 (1) ZLR 181 (S).

Apart from that, the six grounds of appeal are argumentative. For instance, ground one complains of the consolidation of the two applications by the court a quo and its decision to dispose of the dispute on the preliminary issues only.  Ground two has three sub grounds relating to how the sale of the house was conducted.  Grounds of appeal must be short and concise and not argumentative and prolix.

In the words of KORSAH JA in The Master of the High Court v Turner SC 77/93:

“………… the prolixity of each ground of appeal offended r 32 of the Rules of the Supreme Court, which requires that ‘the grounds of appeal shall be set forth concisely’, in separate numbered paragraphs……….  It goes without saying that concise means brief, but comprehensive in expression and not argumentative……….”

I must state though that the defective grounds of appeal are not the basis upon which this Court determined the appeal.  Had it been, the grounds would have been struck off.  The defects have been mentioned here as a reminder to legal practitioners that they should pay close attention to the requirements of the rules when crafting grounds of appeal.  In future the court will not be as charitable with such faulty grounds.  There are other considerations dispositive of the appeal which I relate to hereunder.

ISSUES FOR DETERMINATION

Although the grounds of appeal are numerous, long and winding, there are only two issues for determination in this appeal.  They are:

Whether the sale of the house in execution was valid.

Whether the requirements for the eviction of the appellant were satisfied.

WHETHER THE SALE OF THE HOUSE WAS VALID.

A sale in execution of a judgment of the court is a judicial process.  The Rules of the High Court prescribe a procedure to be followed in executing a judgment.  The same rules also prescribe a procedure, and indeed, a method of challenging the sale.  It is a procedure which has evolved over time and has withstood the test.

In terms of r 359 (1):

“(1) subject to this rule, any person who has an interest in a sale in terms of this Order

may request the Sheriff to set it aside on the grounds that-

the sale was improperly conducted; or

the property was sold for an unreasonably low price;

or on any other good ground.”

In terms of r 359 (7), after hearing the parties, the Sheriff may either confirm the sale or cancel it.

Subrule (8) of r 359 allows a party aggrieved by the Sheriff’s decision made in terms of subrule (7), to apply to the court within one month of notification to have the decision set aside.

It should be stated that once a sale has been confirmed or transfer effected, a different set of rules apply to any challenge that may be mounted.  More importantly, the court will not easily upset a sale in execution that has been confirmed.  Much less, where transfer of title has been effected.

This principle was stated very clearly in Mapedzamombe v Commercial Bank of Zimbabwe and Another 1996 (1) ZLR 257 (S) at 260 C-E, where the court said:

“Before a sale is confirmed in terms of r360, 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 Bhura Supra 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 Naran v Midlands Chemical Industries (Pvt) Ltd S-220-91 (not reported) at pp 6-7.  When the sale of the property has not only 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”

(The underlining is for emphasis)

In that case, the court went on to point out that under the common law, immovable property sold by judicial decree and transfer passed, cannot be impeached in the absence of an allegation of bad faith, knowledge of the prior irregularities in the sale by execution or fraud.  Indeed, in this jurisdiction, a lot of importance is attached to the process of land registration.  Therefore, once transfer has been registered, the transaction is virtually unassailable.  This is designed to protect, not just judicial sales, but also the system of registration of title in immovable property.

In the present case, the court a quo noted that the appellant confirmed that she had not made an application for setting aside the sale in terms of r 359.  She said she had not done so because the sheriff had not informed her if the full purchase price had been paid.  When she was finally notified of the payment of the purchase price on 6 November 2018, she was out of time to bring a challenge under r 359.  Instead of seeking condonation for failure to act timeously, the appellant decided to bring a challenge under the common law.

In fact the appellant conceded that she had also tried to challenge the confirmation of the sale before the sheriff but she arrived late for the hearing.  As a result, the sale was confirmed in her absence.  This background is important because it shows that the appellant’s resort to the common law was not informed by the existence of common law grounds for challenging the sale, but by ill-advice.  It is an application which was motivated by a desire to side-foot the time limits fixed by the rules for seeking to set aside the sale.

The basis for the application to set aside the sale and transfer of the house to the second respondent is that there was a delay of 5 months in paying the purchase price and that transfer had been effected before the purchase price was paid.  Two insurmountable hurdles stand in the way of the appellant.  The first one is that she cannot rely on an alleged breach of contract, even if there was such a breach, when she is not a party to the contract.  The second is that the common law recognises bad faith, knowledge of prior irregularities in the sale or fraud as grounds for impeaching transfer.  What the appellant relies upon does not meet that threshold.

The doctrine of privity of contract is a simple one but forms the cornerstone of our law of contract.  It is that a contract creates rights and obligations binding only on the parties to it.  One who is not a party to the contract acquires no rights or obligations arising from the contract because he or she is not privy to it.  The appellant is not privy to the contract of sale entered into between the sheriff and the second respondent.  She acquired no rights and no obligations out of the contract in question.  She could not lawfully sue or be sued from that contract.

The appellant approached the court alleging a breach of the contract entered into between the sheriff and the second respondent in that the purchase price was not paid within the seven day period provided for in the contract.  The court a quo found that the appellant lacked locus standi in judicio to sue on the contract there being no privity of contract.  The court a quo cannot be faulted for drawing that conclusion.

In any event, the true facts are that the second respondent obtained a loan from Steward Bank Limited to raise the purchase price.  Steward Bank Limited intended to register a mortgage bond on the title deed as security for the debt owed by the second respondent.  It is standard conveyancing practice that in such circumstances the financier gives a bank guarantee undertaking to remit the purchase price upon registration of the mortgage bond.  That is done in order to facilitate transfer and payment of the purchase price, the letter of guarantee being accepted as assurance of the existence of the purchase price.

Steward Bank Limited issued the bank guarantee in the form of a letter addressed to the Sheriff on 14 June 2018.  It reads in part:

“Re: CONDITIONAL UNDERTAKING AND INSTRUCTION TO ATTEND TO TRANSFER OF TITLE AND MORTGAGE BOND REGISTRATION.

At your instance, we advise that Steward Bank Limited holds at your disposal the undermentioned sum which will become payable to you upon receipt of written advice, or written and signed endorsement by yourselves hereon, that the above mentioned registrations have been simultaneously effected.

This undertaking will remain in force for three months from the date hereof after the expiry of which we reserve the right to withdraw herefrom by giving you written notice to this effect.”

The bank went on to state that it would pay the sum of USD 115 000.00 upon registration of transfer of the house from the appellant to the second respondent and the simultaneous registration of a First Mortgage Bond by the second respondent in its favour.  All this, as I have said, is standard conveyancing practice.  The Sheriff, who is the party enjoying privity of contract in the sale agreement, was satisfied with the bank guarantee.  He gave conveyancing instructions to effect transfer.

The court a quo was satisfied that the Sheriff acted within his rights in electing to abide by the agreement of sale in those circumstances and that the appellant had no locus standi to challenge the Sheriffs decision.  It has not been shown in this appeal why that finding by the court a quo should be interfered with on appeal.

That brings me to the common law grounds for setting aside the sale and transfer of immovable property in judicial sales.  I have said that under the common law immovable property sold by judicial decree cannot be impeached after transfer has been passed in the absence of an allegation of bad faith, or knowledge of the prior irregularities in the sale by execution, or fraud.  See Mapedzamombe, Supra at p260F-G, Maponga v Jabangwe 1983 (2) ZLR 395 (S) at 396 D-E.

The circumstances under which the sheriff conducted the sale and his acceptance of the bank guarantee from Steward Bank Limited do not exhibit any bad faith.  There is nothing in the conduct of the parties pointing to that or to any irregularity or fraud.  Everything appears to have been done above board.

In the exercise of its judicial discretion, the court a quo refused to set aside the sale and transfer of the house.  The test for interfering on appeal with the exercise of discretion by a primary court is well-established.  The exercise of discretion can only be interfered with on limited grounds like where some error was made in exercising the discretion, acting on a wrong principle, allowing extraneous or irrelevant considerations to affect the decision and not taking into account relevant considerations.  See Barros & Anor v Chimponda 1999 (1) ZLR 58 (S) at 62F-G.

In trying to impugn the decision of the court a quo, Ms Musviva for the appellant relied very heavily on the authority of Maparanyanga v The Sheriff and Others SC132/02.  In that case the purchaser of the property in a sheriff’s sale had breached the terms of the agreement in a fundamental way because he paid in instalments when the agreement required full payment upon signing the agreement.  The agreement also provided for transfer against payment of the full purchase price.

The court in that case took a dim view of the sheriff condoning breaches of the sale agreement by the purchaser and accepted a challenge of the sale by a person not privy to the agreement.  The court found that the behaviour of the parties warranted the setting aside of the sale because the deviation was gross.  I am of the view the Maparanyanga case is distinguishable from the present especially as the sale in that case was by private treaty and not by public auction.  I have already demonstrated that the acceptance of a bank guarantee by the sheriff was not only above board, it was also reasonable in conveyancing practice.

In the Maparanyanga case, although the purchase price was $650000,00 payable on the signing of the agreement of sale, the sheriff had allowed the purchaser to pay $110000,00 a day after the signing of the agreement. The purchaser then paid $69 000,00 on 16 May 1995. The total paid was only $180 000,00 and the purchaser had hoped to raise the balance through a mortgage bond. No further payments had been made at the time the matter was heard.

It had not been possible in that matter to pay the creditors because the purchase price was not paid by the purchaser. It is also significant to note that the challenge in that matter had been mounted in terms of r 359 of the High Court Rules and not in terms of the common law.  There was also evidence that although the sheriff and the purchaser had signed a standard form agreement, the sheriff went on to negotiate and agree on terms which were outside the signed agreement. The sheriff disposed of the immovable property without reference to any written terms of the agreement. Clearly that case is distinguishable from the present in many respects including that the court a quo found that the full purchase price was paid. No prejudice was suffered by any of the interested parties. I see no reason for interference with the discretion of the court a quo.  Therefore the sale and transfer are valid.

WHETHER THE REQUIREMENTS FOR EVICTION WERE SATISFIED

In my view the conclusion made in respect of the first issue, namely that the sale in execution and indeed the transfer of the house to the second respondent are valid, also resolves this issue. The moment the application for setting aside the sale was dismissed, it meant that the second respondent, as the lawful owner of the house, had a vindicatory right against the appellant and all those claiming occupation through her. The court a quo correctly applied the law relating to the actio rei vindicatio. All that the second respondent was required to establish was that the house belongs to her and that the appellant and those claiming through her were in occupation against her will. Upon proving those requirements, the onus shifted to the appellant to prove a right of retention. See Chetty v Naidoo 1974 (3) SA 13.

I am satisfied that the requirements for the eviction of the appellant from the house were satisfied. The appeal is completely devoid of merit.

It is for these reasons that the court dismissed the appeal with costs.

GWAUNZA DCJ:				I agree

UCHENA JA:					I agree

DNM Attoneys, appellant’s legal practitioners

FMC Financial Services, 1st respondent’s legal practitioners

Scanlen and Holderness, 2nd respondent’s legal practitioners