Court name
Supreme Court of Zimbabwe
Case number
SC 5 of 2009
Civil Appeal 199 of 2007

Flowerdale Investments and Another (Pty) Ltd v Bernad Construction (Pty) Ltd and Others (199/07) (SC 5 of 2009, Civil Appeal 199 of 2007) [2009] ZWSC 5 (17 February 2009);

Law report citations
Media neutral citation
[2009] ZWSC 5

REPORTABLE (2)


Judgment
No. SC 5/09


Civil
Appeal No. 199/07








(1)
FLOWERDALE INVESTMENTS (PRIVATE) LIMITED


(2)
AUSTERLANDS (PRIVATE) LIMITED v





(1)
BERNARD CONSTRUCTION (PRIVATE) LIMITED


(2)
THE SHERIFF OF ZIMBABWE


(3)
GENESIS INVESTMENT BANK LIMITED








SUPREME COURT OF
ZIMBABWE


CHIDYAUSIKU CJ, SANDURA
JA & GWAUNZA JA


HARARE, FEBRUARY 19,
2008 & FEBRUARY 18, 2009








J C Andersen SC,
for the appellants





E T Matinenga,
for the first respondent





No appearance for the
second and third respondents






CHIDYAUSIKU CJ: This is an appeal against a judgment of the
High Court. The facts of this case are set out in some detail
in a
judgment of this Court, no. SC 92/05, which was an appeal
involving the same parties. The following is a brief
summary of the
facts –







On 23 September 1998 the third respondent obtained judgment
against the first and second appellants over a debt, consequent
to
which judgment the immovable property known as Stand 90 Bulawayo
Township (hereinafter referred to as “the property”)
was offered
for sale by public auction. The property in question belongs to the
second appellant who had stood as guarantor to
the first appellant
for the judgment debt.







At the public auction sale, which took place on 11 November
1999, the first respondent emerged the highest bidder for the

property, having offered an amount of $3.5 million. It was a
requirement in terms of r 356 of the High Court Rules

(“hereinafter referred to as “the Rules”) that the second
respondent (hereinafter referred to as “the Sheriff”) declare
the
first respondent (hereinafter referred to as “Bernard
Construction”) the purchaser to complete the auction sale.
Rule 356
of the Rules provides 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, and that the sale was properly
conducted, he shall declare the highest bidder to be the
purchaser,
subject to confirmation as hereinafter prescribed.”










It was peremptory for the Sheriff to declare Bernard Construction the
purchaser to complete the auction sale. Failure by the
Sheriff to
declare Bernard Construction the purchaser rendered the auction sale
incomplete or imperfecta.







The Sheriff not only refused to declare Bernard Construction the
purchaser of the property but directed that the property be
sold by
private treaty. The Sheriff’s Report, which appears at pp 22-25
of the record, makes this point abundantly clear.
In the first
application the Sheriff’s position was equivocal. Bernard
Construction has not disputed the alleged rejection
of its bid by the
Sheriff. Bernard Construction has not disputed that the Sheriff
directed that the property be sold by private
treaty.




Following the rejection of Bernard Construction’s bid, the second
appellant applied to the High Court in case no. HC 1769/2000

to have the sale set aside in terms of r 359 of the Rules on the
sole ground that the property had been sold at an unreasonably
low
price. Rule 359 provided at the relevant time as follows:






“359 Setting aside sales







Any person having an interest in the sale may make a court
application to have it set aside on the ground that the sale was
improperly
conducted or the property was sold for an unreasonably low
sum or any other good ground. Any such person shall give due notice

to the sheriff of the application stating the grounds of his
objection to confirmation of the sale. On the hearing of the
application
the court may make such order as it deems just.”







Rule 359 of the Rules has since been repealed and substituted by
a new provision in Statutory Instrument 80/2000. I
shall
revert to this aspect of the matter later in this judgment.







It is quite clear on the facts that the second appellant’s
application to the High Court was misconceived, in that it assumed

that the auction sale was complete. The High Court adjudicated the
matter on the erroneous assumption that the auction sale was
complete
and the only issue for determination was the reasonableness or
otherwise of the purchase price. The High Court determined
that the
second appellant had not discharged the onus on it of
establishing that the purchase price was unreasonably low.







The second appellant appealed to this Court against the decision of
the learned Judge in the court a quo. At the hearing of
the appeal the second appellant sought to have the judgment of the
court a quo set aside on two grounds, namely –






(1) that the Sheriff had not declared Bernard Construction the
purchaser of the property in terms of r 356 of the High Court

Rules and therefore the sale by auction was incomplete or imperfecta;
and







(2) that in the event of the appeal Court holding that the auction
sale was perfecta the court a quo had erred in
concluding that the second appellant had not discharged the onus
of proving that the purchase price was grossly unreasonable.






This Court declined to determine the first ground of appeal because
the issue of the incomplete auction sale had been raised for
the
first time on appeal. It had not been raised in the court a quo.
That ground of appeal was not dismissed as it were. It was simply
left open. A proper reading of judgment SC 92/05
makes the
above point very clear.







The second ground of appeal was determined. This Court agreed with
the court a quo that the second appellant had not
discharged the onus of establishing that the property had been
sold for an unreasonably low purchase price. It was on this basis
that the appeal
was dismissed.







The Sheriff understood the judgments of both the High Court and the
Supreme Court to direct him to rescind his refusal to declare
Bernard
Construction the purchaser of the property. He then in effect
rescinded his previous determination and declared Bernard

Construction the purchaser of the property in terms of r 356 of
the Rules. I have some reservations regarding the correctness
of
the Sheriff’s understanding of the judgments of the Supreme Court
and the High Court. I will advert to these reservations
later on in
this judgment.







The Sheriff, after rescinding his previous determination, proceeded
to declare Bernard Construction the purchaser of the property
in
terms of r 356 of the Rules. He did this on 2 June 2006.
On 19 June 2006 the appellants filed an objection
to the
Sheriff’s declaration of Bernard Construction as the purchaser.
The appellants’ objection was in terms of r 359
of the Rules
(as amended by SI 80/2000). The relevant part of r 359 of
the Rules (as amended) provides as follows:






“359 Confirmation or setting aside of sale







(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
ground that –







(a) the sale was improperly conducted; or







(b) the property was sold for an unreasonably low price;







or on any other good ground.







(2) A request in terms of subrule (1) shall be in writing and
lodged with the Sheriff within fifteen days from the date
on which
the highest bidder was declared to be the purchaser in terms of
rule 356 or the date of the sale in terms of rule 358,
as
the case may be:







Provided that the Sheriff may accept a request made after that
fifteen-day period but before the sale is confirmed, if he is

satisfied that there is good cause for the request being made late.







(3) A request in terms of subrule (1) shall –







(a) set out the grounds on which, according to the person making the
request, the sale concerned should be set aside; and







(b) be supported by one or more affidavits setting out any facts
relied on by the person making the request;







and copies of the request shall be served without delay on all other
interested parties.







(4) …




(5) …







(6) …







(7) On receipt of a request in terms of subrule (1) and any
opposing or replying papers filed in terms of this rule, the
Sheriff
shall advise the parties when he will hear them and, after giving
them or their legal representatives, if any, an opportunity
to make
their submissions, he shall either –







(a) confirm the sale; or







(b) cancel the sale and make such order as he considers appropriate
in the circumstances;







and shall without delay notify the parties in writing of his
decision.







(8) Any person who is aggrieved by the Sheriff’s decision in terms
of subrule (7) may, within one month after he was notified
of
it, apply to the Court by way of a court application to have the
decision set aside.







(9) In an application in terms of subrule (8), the Court may
confirm, vary or set aside the Sheriff’s decision or make
such
other order as the Court considers appropriate in the circumstances.







(10) Where no request has been lodged with the Sheriff in terms of
subrule (1) within fifteen days from (the) date on which
the
highest bidder was declared to be the purchaser in terms of rule 356
or the date of the sale in terms of rule 358,
as the case may
be, he shall, subject to the proviso to subrule (2), confirm the
sale.”










Rule 359 (as amended) vests in the Sheriff the power to confirm
or deny confirmation of an auction sale in respect of which
he has
declared a purchaser in terms of r 356. Rule 359 (as
amended) vests in the Sheriff a fairly wide discretion
to confirm or
deny confirmation of an auction sale. This discretion was
previously vested in the High Court prior to the amendment
of r 359.







The second appellant objected to the Sheriff’s declaration of
Bernard Construction as the purchaser on the following grounds
–






(a) the second appellant had since paid the judgment creditor and
there was therefore no cause of action at the date of acceptance,

i.e. 2 June 2006;







(b) that Bernard Construction was never declared the highest bidder
in terms of r 356 of the Rules;







(c) that the said sale was never confirmed as is required by r 359
of the Rules; and







(d) that no payment at all was made by Bernard Construction towards
the purchase price of the property.







Bernard Construction opposed the objection on the following grounds –






(1) that the citation of the parties was wrong and that the
proceedings were procedurally wrong;







(2) that the application cited both the old and the new Rules and
this was fatal;







(3) that the new Rules were not applicable in this case as our law
does not allow retrospective effect;







(4) that the application was out of time; and







(5) that the second appellant had failed dismally to reverse the sale
in both the High Court and the Supreme Court.






The Sheriff, after considering submissions by both parties, upheld
the second appellant’s objection to the Sheriff’s declaration
and
refused to confirm the auction sale. He declined to confirm Bernard
Construction’s bid for a number of reasons set out
in some detail
in his Report filed of record. In brief the Sheriff’s reasons for
declining confirmation are that –






(1) Bernard Construction’s bid for the property was too low;







(2) the Sheriff himself had declined to confirm the auction sale and
had directed that the property be sold by private treaty;







(3) Bernard Construction had not paid any of the purchase price to
the Sheriff despite demand for payment by the Sheriff; and







(4) the appellants had since discharged their indebtedness to the
judgment creditor.






Following the Sheriff’s determination, Bernard Construction
applied to the High Court to have the Sheriff’s determination
set
aside on review on the ground that the Sheriff had no jurisdiction to
entertain the matter as it had been finalised by the
Supreme Court
and the High Court. Bernard Construction also contended that the
Sheriff had erred in applying r 359 of the
Rules as amended by
SI 80/2000 when the sale in question took place prior to the
amendment. The learned Judge in the court
a quo upheld
Bernard Construction’s objection and set aside the Sheriff’s
determination refusing to confirm the sale. His reasoning
in
setting aside the Sheriff’s determination appears at p 3 of
the cyclostyled judgment (HC 6463/06). The learned
Judge
reasoned as follows:






“I am in agreement with the arguments advanced on behalf of the
applicant. The respondents have indeed revived issues that
were
finalised by the Supreme Court. The sole issue upon which (the)
third respondent challenged the sale before the High Court
and later
on appeal to the Supreme Court was the price offered by the
applicant. The first respondent had no jurisdiction to
entertain
the objection again. I cannot see how the second and third
respondents can seek a reconsideration of the same subject-matter

that was determined by the Supreme Court In this case the
subject-matter is the sale in execution of stand number 90,
Bulawayo
Township. One cannot select issues arising from the same
subject-matter and seek their resolution piecemeal. There is need
to uphold the principle of finality to litigation.







For the above reasons I find merit in the application. (The)
applicant has sought costs on a higher scale against (the) first
and
third respondents.”







The appellants now appeal against this judgment. The grounds of
appeal are set out in the Notice of Appeal, which reads as
follows:






“GROUNDS OF APPEAL







(1) The learned Judge erred and misdirected himself in making a
ruling that the dispute placed before the Sheriff of Zimbabwe was
the
same dispute with proceedings in case number HC 1769/00 and
SC 92/05 and hence the defence of res judicata was
successfully raised by the first respondent.







(2) The learned Judge ignored the fact that the Supreme Court
disposed of the proceedings in case number HC 1769/00 and
SC 92/05
on the sole ground of whether or not the price was
unreasonably low and declined to deal with the question of whether or
not the
sale was perfecta since the papers filed of record did
not raise the issue.







(3) The learned Judge failed to appreciate that the Sheriff of
Zimbabwe clearly had jurisdiction to entertain the objection raised

after the Supreme Court judgment in case number HC (this should be
SC) 92/05 and that the decision by the Sheriff was not

challenged on the merits by any of the respondents herein.







(4) The learned Judge ought to have dismissed the application brought
by (the) first respondent in light of the fact that the judgment

creditor had been paid in full and the cause of action had been
extinguished and that (the) first respondent had not paid anything

for the property since 1999 and that the balance of convenience was
in favour of the decision not to confirm the sale.







(5) The learned Judge erred and misdirected himself in that he was
unnecessarily influenced by the need to uphold the principle
of
finality in litigation.







(6) There was no justification in awarding an adverse order (of
costs) as against the second appellant.”







Although the notice of appeal sets out several grounds of appeal,
this matter turns on the one issue, namely whether the Sheriff

adjudicated upon and determined a matter that had already been
finalised by this Court and the High Court. In other words, the

issue is whether the defence raised by the first respondent of
res judicata should have prevailed in this matter.







The learned Judge in the court a quo accepted Bernard
Construction’s contention that the dispute between the parties was
res judicata. I respectfully disagree with this
conclusion. In my view, the defence of res judicata
raised by Bernard Construction should not prevail.







I disagree with the learned Judge’s conclusion for the following
reasons -







The essential elements of res judicata are –






(1) the two actions must be between the same parties;







(2) the two actions must concern the same subject-matter; and







(3) the two actions must be founded upon the same cause of action.







See Hiddingh v Dennysen 3 SC 424 at 450; Bertram v Wood
10 SC 180; Pretorius v Divisional Council of Barkly East 1914
AD 407 at 409; Mitford’s Exors v Elden’s Exors 1917 AD
682; Le Roux v Le Roux 1967 (1) SA 446 (AD); and Voet
44.2.3.







I accept that both applications concern the same parties and the same
subject-matter. Accordingly, two of the three requirements
for
res judicata have been met. The third requirement has
not been met because the two actions are based upon two different
causes of action.
The first application had as its cause of action
the averment that the auction sale price was unreasonably low. The
second application
has as its cause of action the averments set out
in the appellants’ objection. Among these is the averment that
the auction
sale was incomplete or imperfecta, in that Bernard
Construction was never declared the purchaser of the property in
terms of r 356 of the Rules, rendering the
auction sale in the
first instance incomplete.







A proper reading of Supreme Court judgment no. SC 92/05
relating to the first application reveals that the issue of the

auction sale being incomplete or not was specifically left open. It
would be a contradiction in terms to assert that an issue
that has
been left open was determined and is res judicata.







According to the Sheriff’s Report, he rescinded his determination
refusing to declare Bernard Construction as the purchaser
in terms of
r 356 in the first instance in compliance with the judgments of
the High Court and this Court. That was his
understanding of the
two judgments.







The Sheriff’s interpretation of the two judgments is open to doubt.
I, however, do not wish to make a determination on the
meaning of
the judgments because the parties did not canvass this issue on
appeal. I merely wish to make the observation that
it is common
cause that the Sheriff initially declined to confirm Bernard
Construction as the purchaser of the property in terms
of r 356
of the Rules. Having declined to do so, the Sheriff directed that
the property be sold by private treaty. Why
the property was not
sold by private treaty as directed by the Sheriff is not clear on the
record. It would appear the appellants
only became aware of the
Sheriff’s refusal to confirm the auction sale in the course of the
first application upon reading the
Sheriff’s report. The
appellants, in my view, should have then amended their pleadings to
include the newly discovered cause
of action. They did not.
Instead they unsuccessfully sought to do this on appeal.







As I have already stated, the Sheriff refused to declare Bernard
Construction the purchaser in terms of r 356, following
which
the second appellant launched an application seeking to set aside the
auction sale on the ground that Bernard Construction’s
bid was
unreasonably low. It is quite clear that the first application was
misconceived for reasons I have already stated in
this judgment.
This Court and the High Court determined the first application on the
erroneous assumption that the auction sale
was perfecta. The
two judgments did not set aside the Sheriff’s determination in the
first instance. If the Sheriff’s determination
still stands, then
the auction sale to Bernard Construction is imperfecta.







However, even if I were to proceed, as I will do, on the basis
accepted by both parties in this application, that the Sheriff

correctly rescinded his original determination, reconsidered the
matter afresh and declared Bernard Construction the purchaser,
I will
arrive at the same conclusion.







The Sheriff rescinded his original determination and declared Bernard
Construction the purchaser on 2 June 2006. The Sheriff

accepted the objection of the appellants to his 2 June 2006
declaration on 19 June 2006. He adjudicated on the objection

and declined to confirm the auction sale. The fact that the auction
sale had taken place prior to that date does not render r 359

(as amended) inapplicable. The critical time, in my view, is the
date of the relevant declaration, namely 2 June 2006. Accordingly,

the issue of retrospectivity does not arise.







Finally, this matter was determined by the court a quo
on the basis of res judicata. The merits of the
Sheriff’s determination, firstly in refusing to declare Bernard
Construction as the purchaser in the first
instance and, secondly,
the Sheriff’s refusal to confirm the auction sale in terms of r 359
(as amended) have never been
adjudicated upon on the merits.







This matter has been going on for about ten years. Referring this
matter back to the High Court for the purpose of determining
the
matter on the merits would not be in the interests of justice as that
would merely prolong litigation in this matter. Even
more
importantly, none of the parties has asked this Court to refer the
matter back to the High Court for determination on the
merits. The
need to bring finality to litigation in this matter is imperative.
The High Court would be in no better position
to determine the
application on review than this Court.







The facts of this matter are virtually common cause. Rule 356
and r 359 confer some measure of discretion on the Sheriff
to
declare and confirm purchasers in auction sales. The Sheriff
exercised that discretion in terms of r 356 and r 359
of
the Rules. There is nothing on the record that remotely suggests
that he misdirected himself in the exercise of that discretion.

There is absolutely no basis for suggesting that that discretion was
exercised in a grossly unreasonable manner. In short,
there is no
basis for possible judicial interference on review on the merits.







In the result, the appeal is allowed with costs. The judgment of
the court a quo is set aside and substituted with the
following –






“The application is refused. The decision of the Sheriff in
refusing to confirm the sale is allowed to stand. Costs follow
the
result.”



















SANDURA JA: I agree



















GWAUNZA JA: I agree



















Chinamasa, Mudimu, Chinogwenya & Dondo, appellants' legal
practitioners



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