Changing Tides – A Reconsideration Of Uniform Rule 46A(9) Relating to The Fixing Of A Reserve Price Of A Property Being A Primary Residence And Being Sold In Execution

A LOOK AT STANDARD BANK OF SA LTD V TCHIBAMBA AND ANOTHER (5642/2018) [2022] ZAWCHC 169

This judgment concerns the reconsideration of a reserve price fixed in an order for a Uniform Rule 46A application for leave to execute against the defendant’s primary residence.

It addressed the practical difficulties of the operation of Rule 46A(9).

Rule 46A(9) prescribes that where the reserve price is not achieved at a sale in execution, the sheriff must submit a report to the court, within five days of the date of the auction. The report must contain:

(i) the date, time and place at which the auction sale was conducted;

(ii) the names, identity numbers and contact details of the persons who participated in the auction;

(iii) the highest bid or offer made; and

(iv) any other relevant factor which may assist the court in performing its function in paragraph (c) of Rule 46A.

Default judgment for R955,411.72 was granted against the defendant in 2018 for arrear payments on their mortgage loan. In 2019, the court ordered the property executable and prescribed a reserve price of R973,032.05 in terms of Rule 46A(8)(e).

The highest bid accepted as per the conditions of the sale at the auction was R700,000, as the bidder deemed the property to be in poor condition and anticipated an expensive eviction of the foreign nationals residing on the property. As required by Rule 46A(9), the sheriff prepared a report detailing that the interior of the property was in poor condition and would require substantial renovation.

Binns-Ward J addresses the limitations of the wording of Rule46A(9) in providing practical guidelines where reconsideration of the reserve price is sought when not realised at auction. He acknowledges the most recently decided cases of Changing Tides 17 (Proprietary) Limited N.O. v Kubheka; Changing Tides 17 (Proprietary) Limited N.O. v Mowasa; Changing Tides 17 (Proprietary) Limited N.O. v Bucktwar; and Changing Tides 17 (Proprietary) Limited N.O. v Horsley [2022] ZAGPJHC 59 (15 February 2022), whereby Fisher J attempted to remedy the lack of uniformity that arises where a reconsideration of a reserve price is sought in terms of Rule 46A(9)(c), by providing procedural guidelines to be followed in the Gauteng Division (Johannesburg).

He disagrees with the finding of Changing Tides that an application by the judgment creditor was necessary to obtain a subrule (9)(c) reconsideration, but rather that the wording of the section directs the sheriff to submit a report to the court which is to be treated as the basis for the court’s reconsideration exercise.

Rule 46A(9)(c) is a procedural requirement and not adversarial in nature, in that it cannot be opposed. This had become the developing practice for lack of procedural frameworks on how parties are to be given notice of the reconsideration or as to how and by when they should exercise their right to present evidence or address the argument.

The reconsideration exercise is a continuation of subrule (3) of the original application, which exists on the basis of supplemented papers initiated by the sheriff’s subrule (9) report rather than the institution of a new application, due to it being a consideration by the court of whether to amend the order already granted in terms of subrule (3) so that it can be successfully executed.

The judge acknowledges that subrule 46A(9) should be further considered by the Rules Board, beyond the limitations of a practice directive, and offers his own workable construction of the rule (paragraph 41).

In summary, the registrar, in consultation with the Judge President, would determine (with reference to the sheriff’s report) the date on which the reconsideration would be heard in open court and the dates by which the interested parties would be required to file supplementary affidavits and heads of argument.

This determination would be made with an awareness of the relative urgency. The reconsideration should be balanced and reasonably timed to allow for obtaining an updated property valuation report. An interval of three to four months would be sufficient between the date of the filing of the sheriff’s report and the reconsideration of the reserve price in open court.

The judge ordered that the defendants were to secure a private sale of the property that they arranged, failing which the sale in execution was to proceed. If the highest bid did not exceed the highest bid at the prior sale, the property would be deemed to be sold to that bidder at the initial bidding of R700,000. Furthermore, the judge ordered that the judgment was to be brought to the attention of the Rules Board.