TRANSCONTINENTAL IMPORT & EXPORT COMPANY (PTY) LTD AND ANOTHER v
BUILDING CONCEPTS (PTY) LTD AND OTHERS 2008 (1) BLR 200 (CA)
Citation: 2008 (1) BLR 200 (CA)
Court: Court Of Appeal, Lobatse
Case No: Civ App 57 Of 2005
Judge: Grosskopf, Moore And Mcnally Jja
Judgement Date: January 30, 2008
Counsel: M Kadye for the appellant. S A Ziga (with him C Manyepedza) for the third respondent.
Flynote
Execution - Sale in execution - Setting aside of - When to be granted - Delay in proceedings.
Execution - Sale in execution - Setting aside of - When to be granted - Sale of immovable property to
purchaser in good faith and without knowledge of defects.
Headnote
The first appellant borrowed money from the third respondent, with the second appellant standing
surety, on security of a mortgage bond over certain immovable property. The first appellant
defaulted, judgment was taken and the immovable property was sold in execution to the first
respondent. More than a year after the sale in execution, the appellants launched proceedings in
the High Court for the setting aside of the sale on the ground of certain alleged irregularities. The
appellants did nothing to pursue the matter until, more than five years later, they gave notice
of intention to proceed. The matter was eventually heard another 21 months later. The
respondents resisted the application on the ground of the appellants' delay in launching and
pursuing the proceedings. The High Court found that, although there were irregularities in the sale,
the appellants had acquiesced in the irregularities and dismissed the application. The appellant
appealed against that decision to the Court of Appeal.
Held: (1) The application would probably have been successful if the proceedings had been
launched expeditiously.
(2) At common law, a sale in execution of immovable property to a purchaser in good faith and
without knowledge of any defects could not be set aside after registration of transfer. Sookdeyi and
Others v Sahadeo and Others 1952 (4) SA 568 (A) at p 571H and Modelay v Zeeman and Others
1968 (4) SA 639 (A) applied.
(3) The onus of proving bad faith or knowledge of defects rested on the party alleging them. In the
present case, that onus rested on the appellants. On the evidence, it had not been discharged.
(4) The appeal would be dismissed on the basis that the first respondent was a purchaser in good
faith without knowledge of any defect at the time of purchase.
(5) Alternatively, after all the time that had elapsed, the appellants had to be regarded as having
waived their rights, further alternatively, the court, by reason of the delay, was justified in exercising
its discretion to decline to enforce those rights. Leeba (Pty) Ltd v First National Bank Ltd and
Others (CC 2278/94), unreported applied.
Case Information
Cases referred to:
Barclays Bank of Botswana Ltd v Siviya [1997] B.L.R. 834, CA
Bhura v Lalla 1974 (2) SA 336 (RA)
Conradie v Jones 1917 OPD 112
Harnaker v Minister of the Interior 1965 (1) SA 372 (C)
Lalla v Bhura 1974 (1) SA 363 (R)
Leeba (Pty) Ltd v First National Bank Ltd and Others (CC 2278/94), unreported
Modelay v Zeeman and Others 1968 (4) SA 639 (A)
Mothusi v The Attorney-General [1994] B.L.R. 246, CA
Ngwako v The Attorney-General [1996] B.L.R. 120, CA
Oudekraal Estates v City of Cape Town and Others 2004 (6) SA 222; [2004] 3 All SA 1 (SCA)
Ramosu v Metsi Drilling Company (Pty) Ltd [2002] 1 B.L.R. 85, CA
Sookdeyi and Others v Sahadeo and Others 1952 (4) SA 568 (A)
Standard Bank of South Africa Ltd v Prinsloo and Another (Prinsloo and Another intervening) 2000
(3) SA 576; [2000] 1 All SA 145 (C)
Tex (Pty) Ltd v Manica Botswana [1997] B.L.R. 795, CA
Transcontinental Import & Export Company (Pty) Ltd and Another v Building Concepts (Pty) Ltd
and Others [2005] 2 B.L.R. 445
APPEAL against a decision in the High Court. The facts are sufficiently stated in the judgment.
M Kadye for the appellant.
S A Ziga (with him C Manyepedza) for the third respondent.
Judgement
At the opening of the hearing the court granted condonation of the appellant's failure, through an
oversight, to serve timeously copies of the notice of appeal on the respondents. It had been
properly filed, and the late service did not prejudice the respondents.
The first appellant (Transcontinental) borrowed money on the security of a mortgage bond over a
piece of land (portion 58) from the third respondent (Barclays). The second appellant is the
managing director and principal shareholder of Transcontinental and was a surety and co-principal
debtor. The first respondent is the ultimate purchaser at the sale in execution. Its failure to appear
in this appeal is unexplained.
The loan repayments fell into arrears, and on 11 March 1996 Barclays obtained judgment against
the appellants for the sum of P142 883.75 with interest and costs. Portion 58 was declared
specially executable.
A sale in execution, purportedly in terms of Order 52 of the Rules of the High Court (Cap 04:02)
(Sub Leg), took place on 12 August 1997. There are only two issues before us, and they are:
1.
Whether the proceedings at the sale in execution were so irregular that the sale should be
set aside.
2.
Whether, if we find that there were irregularities, it is now too late to interfere.
The irregularities in the sale in execution were basically two in number. A third allegation, that the
sale price was unreasonably low, was not persisted in. I think this was wise, given that the
averment of the second appellant was unsupported by experts, and in any event the courts are
difficult to persuade in this regard. See for example Lalla v Bhura 1974 (1) SA 363 (R); Bhura v
Lalla 1974 (2) SA 336 (RA).
The first allegation is that a second piece of land, portion 57, was added to the sale, having been
wrongfully declared executable by the registrar of the High Court on the application of the deputy
sheriff on 24 June 1997. This was some 15 months after portion 58 had been declared executable
and attached by the deputy sheriff in terms of the judgment.
The explanation by the deputy sheriff was that Transcontinental had erected building developments
on portion 58 which encroached on portion 57, also owned by Transcontinental. Accordingly he
could not sell portion 58 by itself. This encroachment was later denied by the appellants.
It seems to me that this was clearly a serious irregularity, and indeed Mr Ziga for Barclays put up no
argument in its defence. It was one thing to sell portion 58, which was the bonded property,
declared executable by the court. It was quite another to sell portion 57, in complete disregard of
the proviso to rule 1 of Order 52, which requires that there first be a writ against movables. This
proviso is designed to protect a debtor's immovable property when he has cash or movables which
could first be used to meet the debt. Moreover it would have given the appellants an opportunity to
dispute the claim about encroachment, as they later did.
The second allegation about irregularity concerned the process by which Building Concepts (Pty)
Ltd became the successful bidder. It is not disputed that in fact the two portions of land were
knocked down to a Mr Van Vuuren. The deputy sheriff states, in a detailed affidavit, that he was
suspicious of Mr Van Vuuren from the start, because he seemed to be closely conferring with the
second appellant, Mr Thipe.
The deputy sheriff was familiar with a practice whereby 'recalcitrant' debtors arrange for 'bogus
bidders' to bid the highest price and then fail to pay the purchase price. He believed that Van
Vuuren was a bogus bidder. Accordingly he announced, at the commencement of the auction sale,
that he would record the details of the second highest bidder. Then, if he provisionally accepted a
higher bid, and the bidder failed to pay the necessary amounts, he would knock the sale down to
the second highest bidder.
This, he says, is what happened. Van Vuuren and the second appellant both deny this, and deny
collusion. There is no affidavit from Building Concepts on this issue. But the real problem is that cl
4 of the conditions of sale, on which he relies, does not authorise this procedure.
The relevant part of cl 4 of the conditions of sale reads:
'If the auctioneer suspects that a bidder is unable to pay any of the amounts referred to in condition six
hereof he may refuse to accept the bid of such bidder, or accept it provisionally until the bidder has
satisfied him that he is in a position to pay such amounts. On the refusal of a bid under such
circumstances, the Property may immediately be put up again for auction.'
The deputy sheriff did not put the property up again for auction. He simply declared the second
highest bidder to be the successful bidder. There is no record of this transaction on the papers,
but there is no reason not to believe him. The property was transferred to Building Concepts on 28
November 1997 for P180 000 as against the P186 000 offered by Van Vuuren.
I must say I regard this irregularity as relatively minor. Indeed, if the auction had been immediately
re-started other bidders might well have left, and in any event the probability would be that the
same purchaser, without competition from Van Vuuren, would have obtained the property at a
lower price.
Nonetheless it would seem to me that, had a court application to set aside the sale been
launched expeditiously, the probabilities are that it would have been successful. No doubt this is
why Mr Ziga for Barclays, concentrated his submissions on the delay by the appellants, both in
launching their application and in pursuing it. I turn now to consider those delays, and their effect in
law.
The delays
The sale in execution took place on 12 August 1997. The sale was properly advertised, and we
know, from a letter written by the second appellant on 7 August 1997 to Barclays managing
director, that he was aware of the advertisement and of the fact that both portions of land were up
for sale. He protested vaguely:
'My name is in the local papers calling on the public to buy my asserts in
Gaborone North and even adding assets I have not pledged to Barclays Bank.'
But he never attempted to set aside the attachments or the writs.
He offered P7 000 a month and asked for the sale to be called off. On 11 August his attorney wrote
to Barclays attorneys saying:
'Apparently an agreement has been reached in terms of which your client has accepted monthly
payments in the sum of P10 000.'
This was promptly denied the following day.
He was present at the sale. He denies that he knew of the sale to Building Concepts, but he does
not seem to have made any attempt to find out what had happened or to protest the illegality of the
inclusion of portion 57. On the day of the sale he was advised by registered post by the
deputy sheriff that the plan of distribution lay for inspection. On 11 September his attorney wrote
to say that the registered letter had been received on that day! He threatened to apply to the High
Court to have the sale set aside unless Barclays cancelled the sale. He was promptly told the next
day that Barclays would proceed with the transfer to Building Concepts.
He took no steps to bring an objection to the plan of distribution before a judge for review in terms
of Order 52 rule 12(22) of the Rules of the High Court.
Transfer was effected on 28 November 1997, some three months later, without any further action
by the appellants. It was only on 7 December 1998, over a year later, that an application was
lodged with the High Court to set aside the sale.
It seems likely that even that late application might not have been made but for an application by
Building Concepts on 6 November 1998 to have the appellants evicted from the premises.
What happened thereafter was even more inexplicable. The appellants vacated the premises.
Accordingly the application for eviction was not pursued. But more significantly, the application
launched on 7 December 1998 was not pursued until 5 February 2004. For over five years the
appellants did nothing. Only then did they file and serve a notice in terms of Order 71 rule 4 of the
Rules of the High Court, giving one month's notice of intention to proceed.
The court, on the application of the respondents, ordered the appellants to give an explanation for
their delay. On 12 January 2005 the second appellant filed an affidavit blaming a series of attorneys
for letting him down. The matter was allowed to proceed.
The judgment of the High Court
It proceeded before Sarkodie-Mensah AJ who gave judgment on 10 November 2005 dismissing
with costs the application to set aside the sale in execution. It is against that judgment, reported as
Transcontinental Import & Export Company (Pty) Ltd and Another v Building Concepts (Pty) Ltd
and Others [2005] 2 B.L.R. 445, that the appellants now appeal.
The learned acting judge accepted that there were irregularities in the
attachment of portion 57 and in the way the sale was conducted, but concluded that the appellants
had acquiesced in the irregularities.
The cases
The learned acting judge cited the case of Standard Bank of South Africa Ltd v Prinsloo and
Another (Prinsloo and Another intervening) 2000 (3) SA 576 (C) at 588. There Davis J had said at
p 588E.
'In the present case it appears that first intervening respondent ... attended the sale, with full knowledge
and did not oppose the taking of the default judgment, indeed raised certain issues with the Sheriff and
Deputy Sheriff prior to the sale having taken place.'
Davis J went on to cite Maasdorp CJ in Conradie v Jones 1917 OPD 112, another case in which
the applicant had been present at the sale. The Chief Justice said:
'By his presence there and his silence he allowed the plaintiff to place himself in a worse position, and is
therefore now stopped from questioning the validity of the sale to the plaintiff.'
It may be noted that earlier in his judgment, Davis J (at pp 586E to 587C) had considered the
provisions of s 70 of the Magistrates' Courts Act of South Africa which provides that:
'A sale in execution by the messenger shall not, in the case of movable property after delivery thereof, or
in the case of immovable property after registration of transfer, be liable to be impeached against a
purchaser in good faith and without notice of any defect.'
There is a similar provision in Botswana's Magistrates' Courts Act, (Cap 04:04). However it relates
only to movable property (s 42) because s 38(2) provides:
'(2)
Where it is required that immovable property be sold in execution, such property shall be sold only
through the Sheriff after process in aid to that end has been granted by the High Court.'
There is no similar provision in the High Court Act dealing with the immunity from impeachment of
a sale in execution of immovable property after the registration of transfer. I do not know why this is
so.
It seems to me however on the authority of Van den Heever JA in Sookdeyi and Others v Sahadeo
and Others 1952 (4) SA 568 (A), that the provisions of s 70 of the South African Magistrates'
Courts Act, represent a codification of the existing Roman Dutch Law, and thus of the law of
Botswana. He said, at p 571H:
'It was a principle in the Netherlands that a perfected sale in execution should, after transfer or delivery of
the subject matter, not be lightly impugned.... This reluctance to rescind perfected sales sub hasta ("under
the spear", i.e. forced sales) has been received in our case law.'
He cited a number of cases and continued:
'These authorities indicate that in certain exceptional cases a sale in execution may nevertheless be
impugned.'
He then referred to s 70 and the provisions about good faith and the absence of knowledge of
defects.
Finally His Lordship made the point that the onus of proving bad faith or knowledge of defects lay
on the person alleging them.
This judgment was concurred in by an impressive bench - Centlivres CJ, Greenberg JA, Hoexter JA
and Fagan JA. It has not since been controverted and has been followed many times. It is to be
noted that in Modelay v Zeeman and Others 1968 (4) SA 639 (A), the Appellate Division held that
the relevant time at which the purchaser was required to be 'in good faith and without knowledge of
defects' was the time at which the purchase was made, and not the time of transfer. That is a very
important point in this case. Although the decision was made on the wording of s 70 of the South
African Magistrates' Courts Act, I think it is clear that it applies equally to the common law position.
There is no allegation anywhere in the papers that the second appellant advised Building Concepts
of the alleged defects in the attachment of portion 57 or in the procedures followed at the time of
the purchase. All that he says is that he 'pleaded with the second respondent [who at that stage
was the deputy sheriff] to stop the sale'. He does not claim to have said that the sale was illegal or
irregular. The earliest that Building Concepts could have known about the complaints was after
second appellant's letter of 11 September was received, either on that day or the next, by Collins,
Newman & Company. Technically, Collins, Newman & Company were acting for Barclays only in
this correspondence, though I note that in subsequent litigation they acted for all three respondents.
They had no duty to refer the letter of 11 September or subsequent letters to Building Concepts.
The onus was on the appellants to show that Building Concepts knew of the alleged defects and
they have not done so.
On this basis alone, that Building Concepts purchased the property in good faith and without
knowledge of any defects in title or procedures, I would dismiss the appeal.
Another way of looking at the matter is the way Mr Ziga's heads of argument put it. As far as the
writ of execution over portion 57 is concerned, this was an administrative act, presumed to be
valid until challenged and set aside. The appellants, knowing what had been done, did not
challenge it until after the sale in execution; did not take it to court until a year after the transfer; and
did not pursue the court action for another five years after that. Whether this is to be regarded as
waiver, or estoppel, or whether the court simply declines to come to the aid of a supine litigant, the
result is the same. See, Oudekraal Estates v City of Cape Town and Others 2004 (6) SA 222
(SCA); Mothusi v Attorney-General [1994] B.L.R. 246, CA; Harnaker v Minister of the Interior 1965
(1) SA 372 (C); Barclays Bank of Botswana Ltd v Siviya [1997] B.L.R. 834, CA at p 845;
In so far as the appellants seek to blame their attorneys for the delay, I agree with Mr Ziga's
submission that this is a case where, unhappily, the sins of the lawyers must be visited upon the
clients. See, Ngwako v The Attorney-General [1996] B.L.R. 120, CA at p 124H; Tex (Pty) Ltd v
Manica Botswana [1997] B.L.R. 795, CA; Ramosu v Metsi Drilling Co (Pty) Ltd [2002] 1 B.L.R. 85,
CA.
I would add that the clients themselves cannot escape blame for the delays. And wherever the
blame lies, we must consider the position of the innocent purchaser, who has apparently started to
develop the properties.
I should also mention in passing that I would find it much easier to deal with problems of this nature
if I were permitted to refer to irregularities in the process of a sale in execution as acts which
render the subsequent sale 'voidable' rather than 'void'. However, this question was not fully argued
before us, and I note that the Appellate Division has gone to some lengths, in the Oudekraal matter,
to avoid using the term 'voidable'. So I will not pursue it.
In so far as the validity of the sale in execution (as opposed to the writ of execution) is concerned,
Mr Ziga again relied on delay. On 11 September 1997 the appellants knew that
the properties had been sold by the auctioneer to Building Concepts. Yet it was only six years and
five months later that they set down this application for hearing in court. I agree that this is
completely unacceptable. I have earlier indicated that I regard the irregularity in the sale procedure
as of relatively minor significance compared with the irregularity in relation to the writ of attachment
of the second portion of land. After all these years I agree with the learned trial judge that, as was
done in Leeba (Pty) Ltd v First National Bank of Botswana and Others (CC 2278/94), unreported
the appellants must be regarded as having waived their rights, alternatively that the court, by
reason of the delay, is justified in exercising its discretion to decline to enforce those rights.
I would dismiss the appeal with costs and it is so ordered.
Grosskopf and Moore JJA concurred.
Appeal dismissed.