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SAFLII Note: Certain personal/private details of parties or witnesses have been redacted from this document in compliance with the law and SAFLII Policy

IN THE HIGH COURT OF SOUTH AFRICA

EASTERN CAPE LOCAL DIVISION, PORT ELIZABETH

                                                                                                            CASE NO: 3980/2011

                                                                                                            DATE HEARD: 30/07/2014

In the matter between

DIMITRI KACNIS                                                                                             1^ST APPLICANT

ROCAFORCE (PROPRIETARY) LIMITED                                                  2^ND APPLICATION

CARGO TORQUE CC                                                                                  3^RD APPLICATION

and

THE SHERIFF OF THE HIGH AND LOWER COURT,

PORT ELIZABETH SOUTH                                                                        1^ST RESPONDENT

STANDARD BANK OF SOUTH AFRICA LIMITED                                    2^ND RESPONDENT

REASONS FOR ORDERS

BROOKS AJ:-

INTRODUCTION

[1] This is an application brought as a matter of urgency pursuant to the provisions of a directive issued by me on 28 July 2014 in accordance with the provisions of rule 12(d) (iii) of the Joint Rules of Practice for the High Courts of the Eastern Cape Province.

[2] The applicant targets two orders made by the late Dukada J on 26 February 2014 and an order of Nhlangulela ADJP made on 12 March 2014, all three orders being issued in the Chamber Book on applications made in terms of rule 46(II) of the Uniform Rules of Court in the hands of the first respondent.  Each of the three orders refers to an immovable property and directs that a sale in execution held on 10 May 2013 be cancelled and the property concerned again be put up for sale.  For the purposes of the application, and the resultant orders, it was possible to deal with the three orders collectively.

[3] The application seeks the recission of the three orders which had been made pursuant to the applications made in terms of Rule 46(II) of the Uniform Rules of Court.  Those three orders had a direct effect on the rights enjoyed by the second respondent, which was the judgment creditor in an action to which reference is made hereunder.

[4] In the circumstances, the applicants cited the first and second respondents, and service of the application was effected pursuant to the provisions of the directive.

THE APPLICATION FOR JOINDER

[5] When the matter was called on 30 July 2014, it was accompanied by an application for leave to intervene brought in terms of the provisions of rule 12 of the Uniform Rules of Court.  This application was in the hands of the trustees of the insolvent estate of 33 [............], E [......], brought on the basis that ownership of the three immovable properties remained with the insolvent estate, [1] which accordingly had a direct and substantial interest in the urgent application.  In these circumstances the trustees sought their joinder as the third and fourth respondents respectively.

[6] The application for joinder was not opposed by the applicants, save for the order sought directing them to pay the costs of the application for joinder on the scale as between attorney and own client.  The first and second respondents made no opposition to the application for joinder at all.  In the circumstances, I considered that a direct and substantial interest had been demonstrated and I issued the following order:

“The applicants, in their capacities as trustees of the insolvent estate of 33 [............], E [......], are hereby joined in the main application as third and fourth respondents respectively.”

THE APPLICATION FOR RECISSION

[7] Pursuant to the grant of the three orders referred to in paragraph [2] hereof, the first respondent had advertised a further sale in execution, at which the three immovable properties were again put up for sale in satisfaction of the second respondent’s judgment, this sale to take place on the morning of 31 July 2014.  Successful recission of the three orders would render invalid the sale now advertised.

[8] The first respondent opposed the application for recission brought by the applicants and filed answering affidavits in support of this opposition.

[9] The second respondent opposed the application for recission brought by the applicants solely to the extent that the applicants sought an order directing the first and the second respondents to pay the costs of the application for recission jointly and severally, the one paying the other to be absolved.

[10] The third and fourth respondents opposed the application for recission, raising the point in limine that the application only appeared to be urgent because of circumstances arising from self created urgency in the hands of the applicants.  The opposition also extended to the merits of the application.

[11] Given the reality of the imminence of the sale of execution now advertised for the following morning, and without making any preliminary finding on the question of urgency, the court heard argument on the application for recission.  Thereafter, the matter stood down until the morning of 31 July 2014, when an order was made in the following terms:

“1.        In respect of the application in the hands of the third and fourth respondents for leave to intervene in these proceedings, which was granted on 30 July 2014, the applicants are directed to pay the costs thereof jointly and severally, the one paying the others to be absolved, such costs to be taxed on the scale as between attorney and client and to included the costs incurred by the first and second respondents in respect thereof.

2.         The application is dismissed with costs, such costs to be paid by the applicants jointly and severally, the one paying the other to be absolved, to be taxed on the scale as the first, second, third and fourth respondents.

3.         Reasons for the orders granted on 30 July 2014 and 31 July 2014 will be furnished in due course.”

[12] The remainder of this judgment is aimed at the provision of reasons for the order granted.

THE HISTORY OF THE ORDERS SOUGHT TO BE RECINDED

[13] On 10 May 2013, pursuant to a judgment granted in this court in favour of the second respondent, three immovable properties which are owned by 33 [............] (now insolvent and falling under E [......] in the hands of the Master of the High Court, Port Elizabeth) were sold by the first respondent by means of public auction.

[14] Although there is some dispute on the application papers relating to the true identity of the purchaser of the three immovable properties, in each instance, it is not necessary, in my view, to resolve this dispute for the purposes of determining the outcome of this application.  It is sufficient to record that it is apparent from all the relevant portions of the various affidavits filed by the parties, and some of the annexures thereto, that the first applicant was actively involved in the purchase of all three immovable properties, whether in his individual capacity or as a representative of the second applicant or the third applicant.

[15] It is common cause between the parties that after the initial involvement of the first applicant in the purchase of the three immovable properties, the subsequent conduct of the post purchase events relating thereto was assumed by one EMMANUEL KACNIS, who is a brother of the first applicant and who is the deponent to the founding affidavit in the application for recission.

[16] Be that as it may, each of the orders granted on 26 February 2014 and 12 March 2014 respectively, which are now sought to be rescinded, refer to a sale in execution held by the first respondent at which the first applicant purchased the relevant immovable property.  In accordance with the provisions of Rule 46(II) of the Uniform Rules of Court, each of the orders directs that the first applicant, as purchaser, is to pay such damages as may be demonstrated to have been suffered by the second respondent, as judgment creditor, pursuant to the cancellation of the sale in execution.

[17] The reason for the reference to the first applicant as purchaser of the immovable properties flows from the content of Annexure A to the conditions of sale applicable to the cancelled sales in execution.  The first applicant provided the information which, in each instance, appears therein.  His name appears as the purchaser.  His identity number is provided as part of the purchaser’s particulars, as is his residential address in Summerstrand and his personal telephonic and e-mail contact details.  In response to the printed invitation on the form to give details if the purchaser is a company, close corporation or trust, all that is inserted in respect of thereof is “Roca Force” (in the first instance) and “Cargo Torque” (in the remaining instances).  No indication is given as to whether these entries refer to a company, or a close corporation or a trust.  No registration numbers are provided in the space allocated for this information.  In one instance, below the words “Roca Force”, the name “E. Kacnis” is recorded as a director or member or trustee signing on behalf of a trust.  In another instance, below the words “Cargo Torque, the names “C. Kacnis” and “E Kacnis” are entered.  In the third instance, no name appears below the words “Cargo Torque”.  It is no wonder that, on the basis of this information provided by the first applicant, the first respondent cited the first applicant as the respondent and purchaser when approaching the respective judges in chambers on applications brought in due course under Rule 46(II) of the Uniform Rules of Court.

[18] In the founding affidavit in the application for recission, it is alleged that in purchasing the three immovable properties at the sale in execution held by the first respondent, the first applicant acted on behalf of the second applicant, which is a company which then purchased one property, and on behalf of the third applicant, which is a close corporation which purchased the remaining two properties.  Be that as it may, it is common cause that in respect of each of the purchases of the immovable properties, the purchaser failed to secure the balance of the purchase price timeously in fulfilment of a material term common to the respective agreements.  This led to a short history of applications being made in terms of Rule 46(II) of the Uniforms Rules of Court, of them being withdrawn pursuant to the arrangement of extensions of time within which to secure the balances of the purchase prices which remained outstanding, and to the institution of fresh applications in terms of the provisions of Rule 46(II) of the Uniform Rules of Court notwithstanding partial and further payments being made.

[19] It is against this background that it is apposite to record that in the application for recission, it is the applicants’ complaint that in seeking the orders eventually granted in terms of Rule 46(II) of the Uniform Rules of Court, the first respondent did not cite the second and third applicants as the purchasers of the immovable properties, who had a direct and substantial interest in those applications.  Instead, the first applicant was cited and returns of service were furnished to the respective judge in chambers demonstrating that service of those applications had occurred upon the first applicant personally.  It is alleged that  first applicant was not served with the applications in terms of the provisions of Rule 46(II) of the Uniforms Rules of Court.

[20] In opposing the application, the first respondent filed an answering affidavit in which he stands by the content of the returns of service.  Annexed thereto is an affidavit by the deputy sheriff in the employ of the first respondent who effected the service upon the first applicant.  He deposes to an arrangement reached with the first respondent to achieve the personal service then recorded in the returns of service rendered by him.  In the circumstances, he vehemently denies the allegations in the founding affidavit which claim that there had been no service upon the first applicant.  There being no replying affidavit, and there being nothing to suggest that this dispute of fact is palpably implausible, far-fetched or so clearly untenable that the court is justified in rejecting them merely on the papers [2], the court accepted the factual averments made in the answering affidavit.  To the extent that an application was made from the bar for a referral of this aspect to be determined by oral evidence, such application was not granted for want of substance in the circumstances.

[21] It comes as no surprise that the three applications brought in terms of Rule 46(II) of the Uniform Rules of Court were served upon the first applicant.  All that was available to the first respondent was, in each instance, the content of Annexure “A” to the “Conditions of Sale in Execution of Immovable Property” which had been completed using information provided by the first applicant.  Those documents show the details of the first applicant as the details of the purchaser in respect of each of the three immovable properties.  Any reference which may have intended to be to the second and third applicants and which occurs at the foot of each of the documents is inchoate and would have been of no assistance to the first respondent.

[22] In any event, the founding affidavit and its annexures disclose a closely interconnected working relationship between all three applicants and Emmanuel Kacnis, certainly as far as the purchase of the three immovable properties is concerned.  Annexure FA 23 to the founding affidavit is a printout of an e-mail sent to the first respondent by one Stewart Wernberg, dated 13 May 2014, in which the author addresses concerns about the three applications brought in terms of Rule 46(II) of the Uniform Rules of Court.  At the foot of page 3 of the letter, the author states:

“As referred to above, the applications in all three matters (assuming that an application was indeed launched in the case of Erf 1871), service is defective in that none of the Rule 46 (II) applications were served on the correct respondent, the purchaser, Mr Kacnis”.

The penultimate paragraph of the letter reads:

“Further, on 25 January 2014 Mr Emmaunuel Kacnis wrote to Pagdens Attorneys enclosing proof of payment of the sum of R80 000.00 pursuant to the arrangement between Mr Dimitri Kacnis and the judgment creditor and requesting a statement of the outstanding amount to which he received not response.  Under the circumstances, it is most disturbing that the fact of this payment was not drawn to the court’s attention and that no notification or response was received from Pagdens or the Sheriff’s office confirming that applications had been launched under Rule 46(II).”

Annexure FA 24 to the founding affidavit is a printout of an e-mail sent from the first applicant to Emmanuel Kacnis on 18 July 2014 which carries as an attachment a copy of the advertisement of the auction of the three immovable properties scheduled for 10.00 am on 31 July 2014.

[23] In deposing to the founding affidavit, Emmanuel Kacnis informs the court that he is a member of the second applicant and a director of the third applicant.  He identifies the first applicant as his brother.

[24] A confirmatory affidavit deposed to by the first applicant forms part of the application papers.

[25] The wording of sub rule 46 (II) (a) of the Uniform Rules of Court is as follows:

“If the purchaser fails to carry out any of his or her obligations under the conditions of sale, the sale may be cancelled by a judge summarily on the report of the sheriff conducting the sale, after due notice to the purchaser, and the property may again be put up for sale.”  (Emphasis provided).

[26] The purpose of joinder is to afford the opportunity to make representations prior to an order being issued which may affect the interests of the person joined.  In order to give effect to this principle, the concomitant requirement of service upon the person joined is obvious.

[27] In my view, in the circumstances of this matter, given the close, interconnected relationship between the applicants and Emmanuel Kacnis and the extent to which the manner in which Annexure “A” to “Conditions of Sale in Execution of Immovable Property”’ in each instance, creates the distinct impression that the first applicant is the purchaser of the three immovable properties, the complaints in the founding affidavit of non joinder and non service are insubstantial.  For the purposes of the applications in terms of Rule 46(II) of the Uniform Rules of Court, effective notice was given to all three applicants when the process was served personally upon the first applicant qua purchaser.

THE AVAILABLITY OF RECISSION

[28] In argument, Mr Marais, who appeared on behalf of the third and fourth respondents, referred the court to authority for the view that a cancellation of a sale in execution cannot be revived by a recission in terms of Rule 42(I) (a) of the Uniform Rules of Court. [3]  A summary of his reasoning for the view adopted in the matter was provided by Sutherland J in the following manner: [4] 

“The act of the sheriff is not an “application” contemplated by Rule 6.  The act of the judge in cancelling the sale in terms of Rule 46(II) is not a judgment in any conventional sense.  The procedure is sui generis.  Its function is to provide judicial oversight to the process of execution of judgments.  The “cancellation”’ albeit a decision of the judge, defies forensic classification.  It is not an approval of the sheriff’s act; the judge per se effects the cancellation, albeit at the instance of the Sheriff and, doubtless, in turn, at the instance of the judgment creditor.  This cancellation is the precursor to authorising, as contemplated by the Rule, a resale.”

In my view, there is merit in this analysis of the proceedings brought in terms of Rule 46(II) of the Uniform Rules of Court.  The conclusion that those proceedings are sui generis would appear to be apposite.  In my view, the resultant conclusion that the outcome of those proceedings is not susceptible to a recission is correct.  This would be the case even in circumstances such as the present where the application for recission is based in the common law. [5]

[29] It follows that, in my view, for the reasons expressed in the preceding paragraphs, the application for recission fell to be dismissed.

URGENCY

[30] In the founding affidavit, it is alleged that on 08 May 2014 and 16 May 2014, the applicants became aware of the existence of the orders granted in Chambers by the late Dukada J and Nhlangulela ADJP respectively.  The grounds advanced in support of the argument that those orders were deficient then find expression.  In alleging urgency, the founding affidavit claims that the applicants and the deponent, Emmanuel Kacnis, became aware of the sale advertised for 31 July 2014 on 18 July 2014.  No allegations are made in respect of the intervening period.

[31] In contrast, the answering affidavit deposed to on behalf of the third and fourth respondents addresses activity on the part of the applicants subsequent to 08 May 2014.  This includes a reference to the e-mail correspondence between Stewart Wernberg and the first respondent on 13 May 2014, to which reference has already been made, in which the complaints raised in the present application for recission appear to be articulated fully.  The affidavit identifies further that subsequent to the orders made on the applications brought in terms of Rule 46(II) of the Uniform Rules of Court, the applicants remained in occupation of the three immovable properties concerned and were unwilling to vacate notwithstanding that they had been informed of the fact that an insolvency auction had been advertised in respect of the properties for 10 June 2014.   Annexed to the affidavit is a print out of an e-mail from Stewart Wernberg to a member of staff in the employ of the third respondent dated 22 May 2014 advising the third and fourth respondents of the preparation of application papers in the hands of the applicants which “will be launched and served in the next few days”.  This appears to have prompted telephonic contact between the third and fourth respondents and the applicants’ attorneys and a letter dated 05 June 2014 in which the third and fourth respondents advised that the auction scheduled for 10 June 2014 had been stopped.  This letter confirms that the decision to stop the auction scheduled for 10 June 2014 had been taken based on the premise that an urgent application (for recission) will be lodged and in order to prevent the insolvent estate incurring unnecessary costs.

[32] The third and fourth respondents’ answering affidavit records that since 05 June 2014, no application was forthcoming until the present application was launched on 25 July 2014.  The point is reiterated at that stage that the third and fourth respondents were not joined as respondents and only came to learn of the application on 28 July 2014.

[33] The third and fourth respondents also annex to their answering affidavit a copy of a letter dated 25 June 2014 addressed to the applicants’ attorney in which reference is made to pertinent telephonic contact and confirmation is given that the third and fourth respondents will be proceeding with the public auction on 31 July 2014.  A copy of a letter dated 28 July 2014 addressed by the third and fourth respondents to the applicants’ attorney is also annexed to the answering affidavit.  The further letter confirms that the action will proceed on 31 July 2014 and attaches a copy of the earlier letter of 25 June 2014.  It seems that the letter dated 28 July 2014 was written in response to the newly acquired knowledge that the present application had been launched.

[34] There can be no argument against a finding that the applicants were aware of the circumstances in which they found themselves from at least 22 May 2014, when written reference was made to the launch of an application.  Nothing is disclosed in the founding affidavit to explain why the applicants delayed the launch of the application until 25 July 2014.  Certainly, no reliance can legitimately be placed upon a sudden acquisition of knowledge of the date of the auction sale set for 31 July 2014, because the third respondent advised the applicants’ attorney of the date of the sale as early as 25 June 2014.

[35] In my view, where the urgency claimed is so demonstrably self created, the  court would be justified in dismissing the application for that reason alone.  Certainly, this was one of the factors that were taken into account in the consideration of an appropriate outcome in this matter.

COSTS

[36] In seeking their joinder, the third and fourth respondents sought an order directing the applicants to pay the costs occasioned by the application for joinder and on a punitive scale.  The order was granted.  The application papers demonstrate unequivocally that from their earliest involvement in any process relating to the three immovable properties which are central to the application, the applicants knew of the role played by the third and fourth respondents.  Were there any room for debate on the accuracy of this conclusion, it is eliminated once communication occurs between the applicants’ attorney and the third and fourth respondents in respect of the launch of an application.  There has never been any dispute about the legal interest which the third and fourth respondents have in the three immovable properties.  That they ought to have been joined ab initio should have been obvious to the applicants.  This is all the more so in circumstances where issues of non joinder and notice are central to the applicants’ perceived complaints about their own treatment in the applications brought in terms of Rule 46(II) of the Uniform Rules of Court.  In my view, the combination of these factors justified the award of costs of the application for joinder to the third and fourth respondents on an attorney and client scale .

[37] In seeking the dismissal of the main application, the participating respondents all seek an order for costs.  The third and fourth respondents seek costs on a punitive scale.  In my view, such an order was justified.  The clear circumstances of self-created urgency are not even given a token explanation in the founding affidavit.  There is an irresistible inference to be drawn that this lack of attention was a deliberate attempt to bolster the impression of urgency sought to be created in such allegations as are made in support of relief in terms of Rule 6 (12) of the Uniform Rules of Court.  This becomes all the more apparent when consideration is given to the reality that factual material which is highly relevant to a consideration of the applicants’ claim that their application is urgent emerges from the third and fourth respondents’ answering affidavit; these parties were not joined despite their active involvement in the build up to the application and their clear legitimate interest therein.  In my view, the non joinder and the non disclosure of facts pertinent to a proper adjudication of the issues of urgency and the entitlement to recission combine to create an impression that the applicants deliberately withheld information that would be adverse to their chances of obtaining substantive relief.  No replying affidavit  was filed in order to disturb any of these impressions with which the count is left upon an analysis of the answering affidavits.  In my view, the unhappy provenance of the application is deserving of the censure of the court.  The order for costs on the scale as between attorney and client upon the dismissal of the application is apposite.

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R W N BROOKS

JUDGE OF THE HIGH COURT (ACTING)

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