Court name
Supreme Court of Zimbabwe
Case number
SC 92 of 2005
Civil Appeal 68 of 2005

Austerlands (Pvt) Ltd. v Trade and Investment Bank Ltd. and Others (68/05) (SC 92 of 2005, Civil Appeal 68 of 2005) [2006] ZWSC 92 (26 March 2006);

Law report citations
Media neutral citation
[2006] ZWSC 92






















REPORTABLE (80)


Judgment
No. SC 92/05


Civil Appeal No. 68/05








AUSTERLANDS
(PRIVATE) LIMITED v





(1) TRADE AND
INVESTMENT BANK LIMITED








(2) THE
SHERIFF OF ZIMBABWE








(3) BERNARD
CONSTRUCTION (PRIVATE) LIMITED








SUPREME COURT OF
ZIMBABWE


CHIDYAUSIKU CJ,
SANDURA JA & MALABA JA


HARARE, OCTOBER 17,
2005 & MARCH 27, 2006








T Biti, for the
appellant





No appearance for the
first respondent





No appearance for the
second respondent





E T Matinenga,
for the third respondent






CHIDYAUSIKU CJ: The facts of this matter are as follows –






1. The first respondent obtained judgment against the appellant on
23 September 1998.







2. The second respondent sold the appellant’s property to the third
respondent for $3.5 million on 11 November 1999.







3. On 22 February 2000 the appellant launched a court
application challenging the sale.







4. The appellant obtained a default judgment setting aside the sale
on 14 May 2003.







5. On 23 May 2003 the third respondent successfully applied for
rescission of the default judgment and was allowed to oppose
the
application for the setting aside of the sale.







6. Justice Mavingira heard the application on 16 July 2004 and
handed down judgment on 2 March 2005 dismissing the application.






The appellant was aggrieved by the dismissal of the application and
noted an appeal to this Court on the grounds set out in the
notice of
appeal, which read as follows:






“GROUNDS OF
APPEAL






1. The court a quo as grossly (sic) ignored the
fact that the Sheriff’s report dated the 16th February 2000 …
indicated that the sale in execution has never
been confirmed and
that a directive had been issued by the same Sheriff that the
property be sold by private treaty, a fact unknown
to the appellant
at the time that it made its application.





2. A fortiori
the court a quo thus erred in not holding that indeed in
(the) light of the Sheriff’s report and in (the) light of the fact
that the sale had not
been confirmed by the Sheriff, there was no
need for the appellant to make the application.





3. Even assuming that
the sale had been properly confirmed, the court a quo
ignored the fact that the property was sold for an unreasonably low
price.





4. Furthermore, the
court a quo ignored the fact that there were serious
delays in this matter brought (about) precisely by the third
respondent which meant that
the equities no longer favoured the
refusal of the application.





5. The court also
ignored the fact that the appellant had cleared its indebtedness to
the judgment creditor, Trade and Investment
Bank Limited.






WHEREFORE the appellant will pray that this appeal succeed
with costs and the decision of the court a quo is
upturned (overturned?) to read as follows:






“In the circumstances it is declared that the sale in execution
on the 11
th November 1999 was never
confirmed by the Sheriff and therefore the application to set it
aside was unnecessary or, alternatively,
that the sale in execution
of the 11th November 1999 is hereby set aside.
”






After submissions by
both counsel, judgment in this matter was reserved. In the notice
of appeal, and indeed during submissions,
the appellant contended
that the sale in execution was not perfecta by reason of the
fact that the third respondent was never declared the purchaser in
terms of rule 356 of the High Court Rules.
It was also
contended by the appellant that there was never confirmation of the
sale in terms of rule 360 of the High Court
Rules.





The respective rules
provide as follows:






“356. Declaration
of purchaser by sheriff





If the Sheriff is
satisfied that the highest price offered is reasonable, having regard
to the circumstances of time and place and
to the state of the
property market, he shall declare the highest bidder to be the
purchaser, subject to confirmation as hereinafter
prescribed.





360. Confirmation
of sale





If no objection is made
to the court within seven days from the date that the sheriff
declares the highest bidder to be the purchaser
in terms of rule 356
or from the date of a sale by private treaty in terms of rule 358,
as the case may be, the sheriff
shall confirm the sale.”






While awaiting
judgment, and by way of a letter to the registrar of this Court, the
third respondent sought to place before the
Court a document from the
Sheriff declaring the third respondent the purchaser of the property
in terms of rule 356 of the High
Court Rules. The appellant
objected to the production of the document.






The third respondent then made a formal Court application to lead
further evidence, namely, to produce the declaration from the
Sheriff.
The application was set down and argued before this Court.
The Court reserved judgment. I do not intend to make a
determination
on that application because the appeal can be
determined without reference to the document that the third
respondent sought to introduce
in evidence.






The appellant’s
cause of action in the court a quo is succinctly set out
in paras 7 and 8 of the applicant’s founding affidavit. Those
paragraphs read:






“7. The said property is an attractive commercial land that houses
many vibrant commercial tenants. This application is made
in terms
of rule 359 of the esteemed rules of this honourable court. It
(is) the applicant’s contention that the property
was sold for an
unreasonably low price. I base the open market value of Stand 90
to be at $4.8 million. The forced
market value being anything
between $3 780 000.00 and $4 million. I attach
hereto marked Annexure(s) ‘A’ and
‘B’ open valuation reports
by Land & General Owen Mica & Associates, registered valuers
of Bulawayo, which (confirm)
my views. Indeed I maintain that
during the time of the auction, which I attended, there were not many
bidders and presumably this
is due to the depressed market in
Zimbabwe.







8. I maintain that it will be unjust and inequitable that this
valuable commercial property goes for such a pittance. I maintain
that this honourable court should set aside the same on the basis
that the property was sold for an (unreasonably) low price.”






In the court a quo
the appellant sought the relief that the sale in execution be set
aside because the property was sold for an unreasonably low price.

Nowhere in the founding affidavit of the applicant is it alleged that
the sale in execution was not perfecta.





The suggestion that
the sale in execution was not perfecta arises from the report
of the Sheriff to the court a quo. The report states in
part as follows:






“I read through the
applicant’s founding affidavit and the reason why (for?) an
application to stay the sale of the property in
question is that the
price of $3 500 000.00 realised at the auction is too low.





According to the
auctioneer’s report the ‘Open Market Value’ of the property is
$5 950 000.00 and the ‘Forced Sale
Value’ of the
property is $3 850 000.00. The price realised at the
auction is slightly lower than the Forced Sale Value.
Although the
Deputy Sheriff, who happens to be my commissioner at the auction,
indicated in his report that the price was reasonable
the Sheriff
directed the auctioneer to sale (sell) the property by private treaty
for any price above the Forced Sale Value according
to the
auctioneer’s report.





The applicant in its
application attached a valuation report showing that the ‘Open
Market Value’ of the property stands at $4 000 000.00.





I will, however, not
oppose the relief being sought by the applicant and will abide by the
decision of the court.”






Although the Sheriff
in the report does not categorically state that he did not declare
the third respondent the purchaser, it is
contended that his
directive that the property be sold by private treaty suggests that
he did not confirm the sale in terms of rule 356
of the High
Court Rules. It is also quite clear that the report of the Sheriff
is made in the context that the issue before the
court a quo
was whether or not the purchase price was reasonable, and not that
the third respondent had not been declared the purchaser.





Given that situation,
I am not entirely satisfied that the implication that there was no
such declaration was deliberate as opposed
to being inadvertent.
The precise circumstances of the directive that the sale of the
property be by private treaty are not clear.






It is quite clear from the founding affidavit in the court a quo
that the appellant’s cause of action was the unreasonably low price
at which the property was sold. Indeed, the application ex facie
was made in terms of rule 359 of the High Court Rules, which
permits the setting aside of the sale of property sold by auction
at
an unreasonably low price.






The court a quo
proceeded to determine the application on the basis that the issue
before it was the price at which the property was sold. The
learned
Judge in the court a quo concluded as follows:






“The onus to show that the price realised at a sale in
execution is unreasonably low is upon the applicant. See
Morfopoulos v Zimbabwe Banking Corporation 1996 (1) ZLR 626 at
633C. This was said to be ‘a formidable task’ in Benma
Enterprises v Benjamin and Others
SC 49/99 at p 6. In the
Morfopoulos case supra at p 631 G-H the
learned judge pointed out that such sales are not easily set aside
and gave the reasons therefor at p 627 F-H
as:






‘(a) the judgment creditor is provided with his just relief; and





(b) the reliability and
efficacy of sales in execution should be upheld so that potential
bidders at auction sales (are) not discouraged
from bidding, and thus
reducing the potential sale price to be realised.’







The learned judge went on to point out at p 633B that the court
should be reluctant ‘to accept the theoretical evidence of
(a)
valuator against the specific evidence of a price offered in open
competition at an auction sale, property (properly?) advertised
and
property (properly?) conducted’. Reference was made therein to
Lalla v Bhura 1973 (2) RLR 280 and Zvirawa v Makoni and
Anor
1988 (2) ZLR 15 at 18E.





In his heads of
argument the applicant’s counsel properly conceded that judicial
sales are not lightly set aside.





The learned judge in
the Morfopoulos case (supra) further stated at
p 6325(?)D that he would ‘attach only slight weight to the
assessments … for the reasons (reason?) that
they are unsworn’.
The two valuations in casu are similarly unsworn and I agree
with the third respondent’s counsel’s submission that only slight
weight should be accorded
to them. In any event the percentage
differences between the forces sale values given in the two reports
and the price obtained
for the property are, in my view, not of such
magnitude as to warrant a finding that the price obtained for it is
unreasonably low
as contended by the applicant. As submitted by the
third respondent’s counsel, no evidence has been placed before the
court of
the sale of (a) comparable property (properties) at the
prices set out in the two valuation reports. Needless to say, the
valuation
report of 14 May 2003 is of no relevance whatsoever in
the determination of whether or not $3 500 000.00 is an
unreasonably
low price. That price, on the evidence before the
court, cannot be said to be ‘substantially less than the market
price’ (Zvirawa v Makoni supra).





In the result and for
the above reasons the application is dismissed with costs.”






The reasoning and the
conclusion of the learned Judge in the court a quo cannot
be faulted.





It is contended in
the notice of appeal and in the submissions to this Court by the
appellant’s counsel that the court a quo erred in not
considering the report of the Sheriff and in not concluding that the
sale in execution was not perfecta.





I am unable to accept
this contention for a number of reasons –





Firstly, the legal
inadequacy of the sale in execution was not the cause of action set
out in the founding affidavit. The general
rule that has been laid
down in this regard is that an application stands or falls on the
founding affidavit and the facts alleged
in it. This is how it
should be, because the founding affidavit informs the respondent of
the case against the respondent that
the respondent must meet. The
founding affidavit sets out the facts which the respondent is called
upon to affirm or deny. See
Pountas’ Trustee v Lahamas
1924 WLD 67 at 68. Nowhere in the founding affidavit is it alleged
that the third respondent was called upon to affirm or deny
that the
sale in execution was imperfecta.





Secondly, the issue
of the sale being imperfecta was being raised for the first
time on appeal. Is this permissible? The general rule, as I
understand it, is that a question
of law may be advanced for the
first time on appeal if its consideration then involves no unfairness
to the party at whom it is directed.
See Estate Lala v Mohamed
1994 AD 324. The principles applicable to the raising of a point of
law for the first time on appeal were succinctly set out by
KRIEGLER J in the case of Donelly v Barclays National Bank
Ltd
1990 (1) SA 375 at 380H-381B, where the learned judge had
this to say:






“Secondly, it is clearly a wholly new line of defence now being
taken. It was not mentioned in the summary judgment proceedings
nor
in the plea. It was never referred to in evidence or argument at
the trial. Its mere novelty, of course, is no ground per se
for rejecting it. However, generally speaking, a Court of Appeal
will not entertain a point not raised in the court below and
especially
one not raised on the pleadings in the court below. In
this regard I need do no more than to refer to Herbstein &
Van Winsen
The Civil Practice of the Superior Courts in
South Africa
3 ed at 736-737. In principle, a Court
of Appeal is disinclined to allow a point to be raised for the first
time before it.
Generally it will decline to do so unless –






(1) the point is covered by the pleadings;






(2) there would be no unfairness to the other party;





(3) the facts are
common cause or well-nigh incontrovertible; and





(4) there is no ground
for thinking that other or further evidence would have been produced
that could have affected the point.






See Cole v Government of the Union of South Africa 1910
AD 263; Van Ryn Wine and Spirit Co v Chandos Bar 1928 TPD
417 at 421; and Paddock Motors (Pty) Ltd v Igesund 1976 (3) SA
16 (A) at 23.”






Applying the above
principles to the facts of this case leads me to the conclusion that
this is not a proper case to allow the appellant
to raise for the
first time on appeal this new point of law.





The Sheriff in his
report states that there was a directive for the sale of the property
by private treaty. It was argued that
this directive by implication
means that the third respondent was never declared the purchaser in
terms of rule 356 of the High
Court Rules. I have serious
doubts that this reference to the directive in the Sheriff’s report
satisfies the first principle
set out in Donelly’s case
supra, that the point in question must be covered by
the pleadings.





The second principle
set out in Donelly’s case supra is that there should
be no unfairness to the other party. I have no doubt that the
raising of this point of law on appeal for the
first time is very
unfair to the third respondent. The third respondent went to court
in the court a quo to meet the case that the purchase
price of the property was too low. He was entitled to assume at
that point in time that the
appellant was conceding that all the
requirements of the High Court Rules, including rules 356 and 360,
had been complied with.






It is grossly unfair to raise for the first time on appeal that rules
356 and 360 of the High Court Rules had not been complied with.
I
accept the appellant’s contention that it was not aware of this
alleged non-compliance until the report of the Sheriff was
filed.
If the appellant wished to take advantage of this revelation, he
should have applied to the court a quo to file a
supplementary affidavit setting out its newly found cause of action.
The court, no doubt, would have allowed the third
respondent to
answer the new allegation. This would have been the fairest way to
proceed. This procedure would have made it quite
clear to the third
respondent that he was facing two causes of action, the unreasonably
low price of the purchase price and the incomplete
sale in execution.






The third requirement
in terms of the principles set out in Donelly’s case supra
is that the facts should be common cause. There is a dispute
between the parties on whether or not the agreement of the sale in
execution was perfecta. The Court application I have
referred to earlier in this judgment makes it abundantly clear that
the point is contested.





The fourth principle
set out in Donelly’s case supra requires that there
should be no grounds for thinking that further or other evidence
would have been required or produced in the
lower court. In
casu
, it is quite clear that such evidence would have been led
because there has been an application to lead further evidence on the
issue
in this Court.






Applying the principles set out in Donelly’s case supra,
the appellant cannot be allowed to raise for the first time on appeal
the new point of law that the sale in execution was not perfecta.






The appellant also
raised in its notice of appeal the ground that the court a quo
failed to take into account the equities of this matter. The short
answer to this submission, as was correctly submitted by the
third
respondent’s counsel, is that the court a quo was never
asked to consider or to take into account those other considerations,
nor were the factors placed before the court a quo.
There is no basis for challenging the court a quo for not
having determined something that was never placed before it to
determine. Accordingly, this ground of appeal cannot succeed.





In the result, I
would dismiss the appeal with costs.














SANDURA JA: I
agree.














MALABA JA: I
agree.














Honey &
Blanckenberg
, appellant's legal practitioners


James, Moyo-Majwabu
& Nyoni
, third respondent's legal practitioners