- July 28, 2023
- |Concise Law Reports (CLR), Contracts
Hendricks CC and Old Mutual Life entered into a written loan agreement in 2012. Alleging breach of the deed of hypothecation, Old Mutual Life instituted legal proceedings in the High Court against Hendricks CC for payment of N$6 372 939,84 and an order declaring the immovable property that Hendricks CC provided as security, to be declared executable. Hendricks CC did not defend the claim and as a result, the High Court granted default judgment against it, plus interest, and declared the immovable property executable. After the grant of a default judgment, the deputy sheriff attached the property and scheduled a sale in execution by public auction for 11 September 2018
The sale in execution took place as scheduled. The events leading to the sale in execution and the events that occurred on 11 September 2018 shortly before the sale in execution are what led to the appeal.
Old Mutual Life, on 13 December 2018, launched proceedings out of the High Court in terms of which it sought an order setting aside the sale in execution of the property. Old Mutual Life based the relief it sought on its contention that there were multiple non-compliances with the rules of the High Court (particularly rules 109 and 110) about the sale in execution of the property. Mr Harris opposed the application.
The High Court identified two issues that it was required to determine, namely, whether rule 110(4) of the Rules of the High Court was peremptory and if it was, whether non-compliance would result in the setting aside of the sale in execution. The High Court on 26 February 2021 answered both questions in the affirmative and granted the order sought by Old Mutual Life and set aside the sale in execution. Mr Harris is aggrieved by the judgment and orders of the High Court and hence this appeal.
Discussion
UEITELE AJA (SHIVUTE CJ and DAMASEB DCJ concurring):
‘[27] …Rules 109 and 110 are contained in part 11 of the rules which deals with Post-Trial or Post-Hearing matters. Rule 109(1) provides that a writ of execution must contain a full description of the nature and situation including the address of the property and must be accompanied by sufficiently detailed information to enable the deputy sheriff to trace the property.
[30] Subrule 109(6)(a) provides that an immovable property which is subject to a claim preferent to that of the execution creditor may not be sold in execution unless – the execution creditor has caused notice in writing of the intended sale to be served by registered post on the preferent creditor if the preferent creditor’s address is known; and if the property is rateable, on the regional council or local authority council in whose area the property is situated calling on either or all of them to stipulate within 10 days of a date to be stated a reasonable reserve price or to agree in writing to a sale without reserve. The subrule further requires the judgment creditor to provide proof to the deputy-sheriff that the preferent creditor or the regional council or local authority council concerned has so stipulated or agreed that the property may be sold without a reserve price.
[31] In the alternative to the above, subrule 109(6)(b) provides that the sale may only take place if the deputy sheriff is satisfied that it is impossible to notify any preferred creditor in terms of the rule of the proposed sale, or if the preferent creditor or the regional council or local authority council, having been notified, has failed or neglected to stipulate a reserve price or to agree in writing to a sale without reserve.
[32] Rule 110(1) obliges the deputy sheriff to appoint a day or place for the sale being a day not less than one month after the attachment was made. Rules 110(2) and (3) relate to how the notice of the sale must be published. Rule 110(4) provides that the deputy sheriff must, not less than ten days before the sale, forward by registered post a copy of the notice of sale to every execution creditor who caused the immovable property to be attached and to every mortgagee of the property whose address is known.
[44] The context in which rule 110(4) appears is the following: Article 1(1) of the Namibian Constitution establishes the Republic of Namibia as a sovereign, secular, democratic, and unitary State founded upon the principles of democracy, the rule of law and justice for all. Article 5 enjoins the Executive, Legislature, and Judiciary and all organs of the Government and its agencies and where applicable to them, by all natural and legal persons in Namibia, to respect and uphold the fundamental rights and freedoms enshrined in the Constitution. Article 16 grants to all persons the right to acquire, own, and dispose of all forms of immovable and movable property.
[45] A further context under which the rules were enacted is provided by the rules. Rule 3(1) provides that the rules were enacted for the conduct of proceedings in court and for giving effect to the provisions of Art 12(1) of the Namibian Constitution. Rule 3(5) urges legal practitioners and litigants to comply with the rules and all practice directions issued under the rules, and failure to do so may attract sanctions.
[46] …I now turn to the purpose of the rules. What cannot be disputed is that proceedings in execution are inroads upon the constitutional rights and property of the individual. I, therefore, agree with counsel for Old Mutual Life that rules 109 and 110 were conceived in the interests of the judgment debtor and the judgment creditor. Disobedience to the directions set by the rules may cause a debtor to be despoiled without a corresponding reduction of his or her liabilities and satisfaction of his or her creditors and not by the command of the law.
[47] …I proceed to inquire what remedy is, in the contemplation of the drafters of rule 110(4), available to a judgment debtor in circumstances such as these… In the first place, rule 110(4) is couched in peremptory terms. It provides that ‘[t]he deputy-sheriff must . . . forward by registered post a copy of the notice of sale . . . to every mortgagee of the property whose address is known’.
[48] In Messenger of the Magistrate’s Court, Durban v Pillay, the court held that if a statutory command is couched in such peremptory terms, it is a strong indication, in the absence of considerations pointing to another conclusion, that the issuer of the command intended disobedience to be visited with nullity.
[50] …rules 109 and 110, insofar as they relate to bondholders or local or regional authorities, were drafted to ensure adequate protection of their rights as a pre-emptive measure. I therefore find no fault with the conclusion of the court a quo that non-compliance with rule 110(4) will defeat the object and intention of the Rules of Court and will lead to a nullity in the case of non-compliance.
In these premises, it was held that:
a) A mortgage bond is an instrument hypothecating landed property to secure an existing debt or a future debt or both existing and future and it is registered in the Deeds Office so that the world should know the fact that there is a charge against the mortgagor’s property; the object is not to notify the world that the mortgagor owes the mortgagee a specific sum of money.
b) The registration of the mortgage bond in favour of FNB was to create certain real rights in respect of the mortgaged property, i.e., the right to restrain the alienation of the property without its consent. The argument that FNB was not a mortgagee in respect of the property at the time that the property was sold in execution, is thus rejected.
c) Held further that, the meaning of words is, to a significant extent, determined by the context in which they are uttered.
d) Held further that, rule 110(4) is couched in peremptory terms. Non-compliance with the directions set out in rule 110(4) will result in the nullity of the act performed contrary to the directions set out in that subrule.
e)Held further that, where more than one meaning is possible, each possibility must be weighed in light of the context and circumstances in which the rule was enacted; and that a sensible meaning must be preferred to one that leads to insensible or unbusinesslike results or undermines the apparent purpose of the document.
As a result, the appeal was dismissed with costs, such costs to include the costs of one instructing and one instructed legal practitioner.