REPUBLIC OF NAMIBIA

 

HIGH COURT OF NAMIBIA MAIN DIVISION, WINDHOEK

 

RULING

 

Case no: HC-MD-CIV-ACT-CON-2018/03643

 

In the matter between:

 

AGRICULTURAL BANK OF NAMIBIA                                         PLAINTIFF

 

and

 

AUSRIBEL NTEMA NTEMA                                          FIRST DEFENDANT

SUSAN SIZIMBO NTEMA                                         SECOND DEFENDANT

 

Neutral citation:    Agricultural Bank of Namibia v Ntema (HC-MD-CIV-ACT-CON-2018/03643) [2023] NAHCMD 83 (28 February 2023)

 

Coram:        ANGULA DJP

Heard:          14 February 2023

Delivered:    28 February 2023

 

Flynote:       Civil Procedure – Cancellation of Sale in Execution and claim for damages by the Deputy Sherriff discussed – Rule 110(10) and (11) envisage two separate and distinct scenarios. Rule 110(10) deals with the cancellation of the sale in execution in the situation where a purchaser failed to comply with the conditions of sale. Rule 110(11) deals with a claim for loss suffered by an aggrieved creditor against the purchaser for failure to comply with conditions of the sale in execution resulting in the cancellation of the sale in execution.

 

Service – The phrase ‘after due notice to the purchaser’ in Rule 110(10) means that the notice to cancel the sale in execution be served on the purchaser in order to afford the purchaser an opportunity to make representations to the Judge, if he or she so wishes, in compliance with the audi alteram principle.

 

Summary:    This is an application in which the Deputy-Sheriff for the District of Grootfontein (‘the Deputy-Sheriff’) sought an order for the cancellation of the sale in execution in terms of rule 110(10) of Farm Okokure, No. 1002, Otjozondjupa Region held on 04 November 2022. The Farm was sold for N$6 100 000 to Mr Martin Haitopi (‘the Purchaser’).

 

In addition the Deputy-Sheriff sought an order that the Purchaser pays damages to him being the costs he incurred and the commission he would have received had the Purchaser not breached the conditions of the sale in execution.

 

The legal issue that thus fell for determination was whether the Deputy-Sheriff was entitled to claim damages in the amount of N$176 512.63 from the Purchaser through rule 110(10) or rule 110(11) proceedings.

 

Held that: The Deputy-Sheriff was not an aggrieved creditor within the meaning of rule 110(11). There was no debtor and creditor relationship between the Deputy-Sheriff and the Purchaser which entitled the Deputy-Sheriff to claim his costs and commission from the Purchaser.

 

Held further that: The Deputy-Sheriff lacked locus standi institute a claim damages against a Purchaser.

 

Held further that: There is nothing in rule 110(11) that empowers a Judge when cancelling a sale in execution of an immovable property to award damages in favour a Deputy-Sheriff.

 

The Deputy-Sheriff’s claim for damages was therefore dismissed.

 

 

 

ORDER

 

1. The claim for damages by the Deputy Sheriff in the amount of N$176 512.63 is hereby dismissed.

 

2. The matter is finalised and is removed from the roll

 

RULING

ANGULA DJP:

 

Introduction

 

[1]      This is an application in which the Deputy-Sheriff for the District of Grootfontein (‘the Deputy-Sheriff’) sought an order for the cancellation of the sale in execution of Farm Okokure, No. 1002, Otjozondjupa Region held on 04 November 2022. The Farm was sold for N$6 100 000 to Mr Martin Haitopi (‘the Purchaser’). In addition the Deputy-Sheriff sought an order that the Purchaser pays damages to him being the costs he incurred and the commission he would have received had the Purchaser not breached the conditions of the sale in execution.

 

Background

 

[2]      The application served before me on 24 January 2023. As there was no proof that the purchaser had received ‘due notice’ as contemplated by rule 110(10) in a form of the Deputy-Sheriff’s return of service, I postponed the matter to 14 February 2023 for hearing. I ordered that the application be served on the purchaser by the Deputy-Sheriff and that the Deputy-Sheriff must explain to the purchaser that he was entitled to be present at the hearing on 14 February 2023 to make representations, if any, why the sale in execution should not be cancelled. I further ordered the Deputy-Sheriff to file a return of service in respect of service of that order on the Purchaser.

 

[3]      The Deputy-Sheriff filed an affidavit in which he set out the background history to his request for the cancellation of the sale in execution. According to the Deputy-Sheriff the highest bidder was one Mr. Haitopi, the Purchaser. He was asked whether he would be able to pay the deposit, the land tax and the Deputy-Sheriff costs, which he confirmed.

 

[4]      The Purchaser then completed and signed the conditions of sale. The Purchaser was obliged in terms of clause 6 and 10 of the conditions of sale to pay the 10 percent deposit together with outstanding land tax in the amount of N$9 860.00 and the Deputy-Sheriff’s costs and commission as stated in the signed conditions of sale. The total amount payable as calculated by the Deputy-Sheriff is N$797 872.63.

 

[5]      Clause 6 and 10 of the conditions of sale provides as follows:

 

‘[6]       The Purchaser shall pay a deposit of 10% (TEN PERCENT) of the purchase price INTO THE BANK ACCOUNT OF THE DEPUTY SHERIFF ON THE DAY OF SALE, the balance against transfer to be secured by a bank or building society guarantee to be approved by Plaintiff’s attorney, to be furnished to the Deputy-Sheriff within 7 (SEVEN) days after the date of sale.

 

[10]      The purchaser must pay the auctioneer’s charges on the day of the sale and in addition, transfer dues, costs of transfer and arrears rates, taxes and other charges necessary to effect transfer, on request by the legal the legal practitioner for the execution creditor.’

 

[6]      Thereafter the purchaser failed to comply with the conditions of sale in that he failed to pay the amount of N$797 872.63.

 

[7]      The Deputy-Sheriff deposed further that on 14 November 2022, pursuant to clause 8 of the conditions of sale, he dispatched a letter of demand to the Purchaser in which he demanded payment of the said amount due, failing which he would forward a report to the Registrar of the High Court with a request to place the report before a Judge to cancel the sale. The letter further advised the Purchaser that the he would be held responsible for damages caused by him defaulting on the terms of the conditions of sale and that he will be held liable for any damages suffered by the execution creditor and its legal practitioner. The Deputy-Sheriff proceeded to set out how the sum of his damages was calculated and arrived at. It has been compiled as follows:

Commission 5%:     N$150 000.00

Service:                  N$125.00

Travelling:               N$3 820.00

Registration:           N$7.50

Return:                   N$35.00

Vat:                        N$22 525.13

Total:                     N$176 512.63

 

[8]      On 16 December 2022, the Deputy-Sheriff formally filed a report with the Registrar of this court in which he requested cancellation of the sale in execution in terms of rule 110(10) and simultaneously claimed damages in the amount of
N$176 512.63, purportedly in terms of rule 110(11)

 

[9]      When the matter was called on 14 February 2023 in open court, the Deputy-Sheriff appeared as well as the legal practitioner for the judgment creditor whom I assume was on a watching brief. The Purchaser did not appear. I was, however, informed by the Deputy-Sheriff that the Purchaser was aware that the matter was serving before court on that day. This was also evident from the return of service filed by the Deputy-Sheriff. I was satisfied that a case for cancellation of the sale in execution had been made out. I therefore made an order cancelling the sale of execution of Farm Okokure, No. 1002, Otjozondjupa Region held on 04 November 2022.

 

[10]    As regards Deputy-Sheriff’s claim for damages in the amount of N$176 512.63.
I allowed the Deputy-Sheriff to make submissions in support of his claim for damages. As I had doubt about the propriety of the claim, I ordered that the determination of the claim should stand over for consideration and ruling. I reserved my ruling for delivery on 28 February 2023 and postponed the matter to that date. Following below are my reasons for the ruling.

 

 

 

Issue for determination

 

[11]    The legal issue that falls for determination before this court is whether the Deputy-Sheriff is entitled to claim damages in the amount of N$176 512.63 from the purchaser in rule 110(10) or rule 110(11) proceedings.

 

[12]    Before I proceed to consider the legal issue raised by the Deputy-Sheriff’s application, it is apposite at this juncture to briefly set out the thrust of the Deputy-Sheriff’s argument contained in his affidavit and repeated during oral submissions when the matter was heard.

 

[13]    The Deputy-Sheriff argued that rule 110(10) does not require that the notice to cancel the sale in execution must be served on the purchaser. He contented that the rule merely states ‘on the report of the Deputy-Sheriff (after due notice) the sale in execution may be cancelled by a judge, summarily.’ The Deputy-Sheriff pointed out that in the present matter the Purchaser was given notice as required in terms of rule 110(10) ‘and as per rule 110(11) the purchaser, Mr Martin Haitope is responsible for any loss sustained by the Deputy-Sheriff’s costs and commission.’

 

[14]    One has to understand that the Deputy-Sheriff is not a legally trained person but I am aware the Deputy-Sheriff in this matter has been, so to speak, around the block for many years. He is well-vested with legal procedures involving the execution of his duties such as sale in execution of immovable properties. That said, I proceed to consider the applicable legal principles.

 

Applicable legal principles

 

[15]    Rule 110(10) and (11) of the rules of this court provides that:

 

            ‘[10]     If the purchaser fails to carry out any of his or her obligations under the conditions of sale a judge may, on the report of the deputy-sheriff after due notice to the purchaser, summarily cancel the sale and the property may again be put up for sale.

 

[11]      The purchaser is responsible for any loss sustained because of the cancellation of a sale under subrule (10) and an aggrieved creditor whose name appears on the deputy-sheriff’s distribution account may, on application to the judge, who summarily cancelled the sale, recover the loss from the purchaser.’ (underlining supplied for emphasis)

 

[16]    Rule 110(10) and 110(11) envisage two separate and distinct scenarios. Rule 110(10) deals with the cancellation of the sale in execution in the situation where a purchaser failed to comply with the conditions of sale. Rule 110(11) deals with a claim for loss suffered by an aggrieved creditor against the purchaser arising from the cancellation of the sale in execution in terms of rule110 (10). It is clear that the Deputy-Sheriff has, with respect, conflated the application of the two subsections. I first deal with the scenario envisaged by sub-rule 110(10).

 

[17]    As regards, the Deputy-Sheriff submission that rule 110(10) does not require that the notice to cancel the sale in execution be served on the Purchaser, this submission is with due respect, incorrect. I say this for the reason that the phrase ‘after due notice to the purchaser’ received judicial interpretation by this court in Deputy Sheriff for Caprivi Region[1]. In that matter the phrase was interpreted to mean that the purchaser must receive notice from the Deputy-Sheriff that he or she intends to place a report before a Judge in chambers with a request to cancel the sale. In other words, the phrase ‘after due notice’ means that the Purchaser must receive prior notice that a report will be placed before a Judge with a request to cancel the sale in execution. The intention of the framer of the rule is to give notice to the Purchaser in order to afford him or her an opportunity to appear before the Judge on the date stated in the report as to when the report will be considered by the Judge so that the Purchaser can appear and make representations to the Judge, if he or she so wishes, why the sale in execution should not be cancelled. The rule is thus aimed at compliance with the audi alteram principle.

 

[18]    The South African rule 46(11)(a) reads the same as our rule 110(10) save that rule 46(11)(a) has the phrase ‘after due notice to the purchaser’. The South African rule 46(11)(a) was interpreted by the court in Sheriff, Hlabisa and Nongoma[2]. In that matter the court suggested the approach to be followed by the Deputy-Sheriff in the following words:

 

‘When the decision is taken to seek the cancellation of the sale a notice should be sent by registered post or otherwise delivered to the purchaser informing them of that fact.  Secondly, a copy of the report in terms of the rule should be served on the purchaser before the report is lodged with the court.  The report can then be lodged with the court under cover of a letter requesting the cancellation of the sale and attaching the proof of service. If there is any indication that there is a dispute it seems that the judge should refuse an order under rule 46(11) and leave the parties to pursue conventional remedies by way of the ordinary procedures of the court.’

 

[19]    I respectfully endorse the foregoing approach and adopt it to be applied in this jurisdiction. I do so for the reason that, I consider it to be sensible and reasonable and in compliance with the audi alteram principle. I would, however, add that personal service of the notice to cancel the sale in execution upon the purchaser, should be the default position as it provides comfort to the Judge who is to consider the report that the Purchaser has been made aware of the date when request for the cancellation of the sale will serve before a Judge. Speaking for myself, I have less faith in the system of registered mail. Other modern means of transmission and service of a document should be encouraged, such as email and Whatsapp, as long as proof that the recipient has received the document, is produced to the Judge.

 

[20]    It follows therefore that the Deputy-Sheriff’s argument that rule 110(10) does not require that the notice to cancel the sale in execution be served on the purchaser is rejected. I turn to consider the rule 110(11).

 

[21]    I mentioned ealier that the purpose of rule 110(11) is to provide a platform for an aggrieved creditor to claim loss suffered as a result of the purchaser’s breach of the condition of the sale in execution. The case of Deputy Sheriff for Caprivi Region concerned an application brought by the Deputy-Sheriff in terms of rule 49(11) which was  equivalent to the current rule 110(11). Rule 49(11) read slightly different from the current rule 110(11). For completeness sake, I quote it here. It reads:

 

‘If the purchaser fails to carry out any of his obligations under the conditions of sale , the sale may be cancelled by a Judge summarily on the report of the Deputy Sheriff after due notice to the purchase, and the property may again be put up for sale,: and the purchaser shall be responsible for any loss sustained by reason of his default, which loss may, on the  application of any aggrieved creditor whose name appears on the Deputy Sheriff’s distribution account, be recovered from him under judgment of a Judge pronounced summarily on a written report by the Deputy Sheriff, after such purchaser shall have received notice in writing that such report will be laid before a Judge for such purpose; and if he is already in possession of the property, the Deputy Sheriff may, on seven days’ notice , apply to a Judge for an order ejecting him or any person claiming to hold under him therefrom.’ (Underlining supplied for emphasis)

 

[22]    It is to be noted, rule 49(11) had the phrase ‘after due notice to the purchaser’ which has been left out in sub-rule 110(11) but retained in rule 110(10). The reason for leaving out the said phrase from the current rule 110(11) is not apparent. Rule 110(11) envisages that the Purchaser is to be ordered to pay the loss suffered by an aggrieved creditor but there is no provision that he or she should receive ‘due notice’ that an aggrieved creditor would approach a Judge in chambers to make an order that the purchaser should pay the aggrieved creditor’s loss caused by such purchaser’s failures to comply with conditions of sale. I am inclined to think that the omission was not intentional but must have occurred due to an oversight during drafting of the sub-rule. I am certain that once the omission is brought to the attention of the rule maker, it will be rectified.

 

[23]    As in the Deputy-Sheriff for the Caprivi Region case, where the Deputy-Sheriff purported to claim damages against the purchaser, in the present matter the Deputy-Sheriff is likewise claiming damages from the Purchaser relying on rule110(11). In this matter the Deputy-Sheriff contends that the Purchaser is in terms of rule 110(11) responsible for the loss sustained by the Deputy-Sheriff consisting of his costs and commission.

 

[24]    In my view the Deputy-Sheriff’s claim against the Purchaser is ill-conceived. I say so for the reason that the Deputy-Sheriff is not an ‘aggrieved creditor’ within the meaning of rule 110(11). There is no debtor and creditor relationship between the Deputy-Sheriff and the Purchaser which entitles the Deputy-Sheriff to claim his costs and commission from the purchaser. In my view, the Deputy-Sheriff’s costs must be recovered from the judgment creditor because it was the judgment creditor who, through its legal representative, instructed the Deputy-Sheriff to cancel the sale in execution. The Deputy-Sheriff’s costs, once paid, will form part of the loss which the judgment creditor would have to claim from the purchaser as loss he or she incurred as a result of the purchaser’s breach of the terms and conditions of the sale in execution.

 

[25]    Support for the foregoing view is to be found in Deputy Sheriff for Caprivi Region where it was held that, in order for a Judge to grant a judgment in chambers sounding in money summarily, it must appear from the Deputy-Sheriff’s report: The manner in which the amount claimed has been arrived at; the damages can only be claimed by an 'aggrieved creditor'; the Deputy-Sheriff cannot obtain a judgment in his favour and in his name against the defaulting purchaser and that that the judgment creditor has to pay the expenses incurred by the Deputy-Sheriff. Furthermore, it was stated that the judgment creditor can only obtain judgment against the defaulting purchaser, if the following requirements have been met, namely that: (a) the Deputy-Sheriff makes a report on behalf of the aggrieved creditor to the Judge in chambers; and (b) the aggrieved creditor's losses are quantified. As pointed out, this may include any amount paid by the judgment creditor to the Deputy-Sheriff in respect of wasted expenses.

 

[26]    I held earlier in this judgment that the Deputy-Sheriff is not an aggrieved creditor within the meaning of rule 110(11). Accordingly there is no aggrieved creditor in the present matter. Neither is there a report which has been prepared by the Deputy –Sheriff on behalf of an aggrieved creditor. Therefore the purported ‘application’ by the Deputy-Sheriff in this matter is still born for lack of locus standi on the part of the Deputy-Sheriff. Furthermore, there is nothing in rule 110(11) which empowers a Judge when cancelling a sale in execution of an immovable property to make a costs order in favour a Deputy-Sheriff.

 

[27]    In any event it has been held that the question of recovery of loss can only be considered when the court is in possession of the report by the Deputy-Sheriff prepared pursuant to rule 110(11) in which the aggrieved creditor seeks judgment against the defaulting purchaser.[3] It has further been held that the judgment creditor’s loss can only be calculated once the second sale in execution has taken place, whereby the purchaser’s liability is determined by the difference between the net proceeds which would have resulted from the first sale and the net proceeds actually resulting from the second sale.[4]

 

[28]    It follows thus from the considerations, findings and conclusions articulated herein, that the Deputy-Sheriff’s claim for loss stands to be dismissed.

 

[29]    What remains for consideration is the format the report under rule 110(10) and 110(11) should take. It is to be noted that rule 110(10) makes mention of ‘the report’ to a Judge whereas rule 110(11) speaks of ‘an application to a Judge’. I am aware that there is no uniformity amongst the Deputy-Sheriffs when they file a report requesting a cancellation of the sale in terms of rule 110(10). This is to be expected because the rule does not prescribe the format the report should take. Some Deputy-Sheriffs write letters as ‘a report’ in terms of rule 110(10) other file ‘a report’ in a form of an affidavit.

 

[30]    In my view, the rule does not contemplate a formal application in terms of rule 65(4). I am however of the view that, since the ‘report’ serves a basis upon which a Judge makes a decision to cancel the sale which has far-reaching legal consequences for the parties, in particular the purchaser, it would be preferable that the ‘report’ be in a form of an affidavit. An affidavit has a force of evidence under oath upon which a judge can comfortably rely for his or her decision. On the other hand a loose ‘report’ in a form of a letter by the Deputy-Sheriff addressed to the Registrar with a request to place the letter before a Judge to cancel the sale in execution, lacks an aura of quasi-judicial authority under which a Deputy-Sheriff operates. It is trite that a Deputy-Sheriff discharges his or her functions as representing the Judge.[5] In this connection regard must be had to the fact that the cancelation of the sale in execution is done by a Judge, means that in doing so, a Judge is exercising judicial oversight over the process of execution. It follows therefore, in my view, the Judge must act upon verifiable and reliable information. It is for those reasons I would propose that the ‘report’ be made in a form of an affidavit as a requirement in this jurisdiction.

 

[31]    This concludes the reasons for the order made in this matter.

 

 

 

___________________

H ANGULA

Deputy Judge-President