REPORTABLE (99)

Judgment No. SC 111/02

Civil Appeal No. 122/00

(1) CHRISTOPHER ZABRON KARIGAMBE (2) SUSAN KARIGAMBE

v (1) CHARLES JOGI (2) DANIEL SHUMBA

(3) CENTRAL AFRICA BUILDING SOCIETY

(4) THE SHERIFF OF THE HIGH COURT

SUPREME COURT OF ZIMBABWE

SANDURA  JA, CHEDA JA & GWAUNZA AJA

HARARE, SEPTEMBER 3, 2002 & JANUARY 20, 2003

E T Matinenga, for the appellants

A P de Bourbon SC, for the first respondent

No appearance for the second respondent

No appearance for the third respondent

No appearance for the fourth respondent

CHEDA JA: The appellants owed certain sums of money to Central Africa Building Society (“CABS”) and other creditors. The creditors sued for their money and had the property of the appellants attached. A sale in execution was eventually arranged. In the meantime the appellants sold the same property to the first respondent by private treaty in an agreement of sale which was signed by the appellants and the first respondent.

Both the appellants and the first respondent were aware that the property was under attachment by the fourth respondent, the Sheriff of the High Court. The first respondent paid the appellants part of the purchase price so that they could settle with their creditors. This would have had the effect of releasing the property from attachment. However, the appellants did not settle their debts. CABS refused to consent to the cancellation of the sale in execution as the sale between the appellants and the first respondent had been arranged without their consent.

On 3 March 1999 the first appellant advised the first respondent that the sale in execution was on and that the first respondent should come and bid in order to protect his interest. The first respondent did exactly that.

At the sale in execution, the first respondent made a bid up to $3.1 million. The next highest bid was for $3 million. The second respondent, Mr Shumba, was never declared a purchaser and has not shown any interest in the matter.

The first respondent subsequently applied to the High Court for the auction sale to be set aside. The High Court granted the first respondent’s application.

The appellants argue that the sale by private treaty was a fraud. That cannot be so. Rule 340 of the High Court Rules provides as follows:

“A sale in execution shall be stopped as soon as sufficient money has been raised to satisfy the said warrant and the costs of the sale.”

There is therefore nothing wrong with entering into an agreement with a person who provides sufficient money on the condition that such person can buy the property and an agreement is entered into by the parties to that effect.

Generally, a sale by public auction should not be set aside unless it falls under the provisions laid down in Rule 359, that is, if “the sale was not properly conducted, or the property was sold for an unreasonably low sum, or any other ground”. Accordingly, the basis of the first respondent’s application properly falls under “any other ground”.

In their supplementary heads of argument, the appellants argue that the first respondent could not be an interested party. This submission cannot be correct, given the fact that they had signed an agreement with him and he had parted with a large sum of money as a deposit for the property. The court a quo was correct in holding that he was an interested party. They recognised his interest and even invited him to come and protect it.

Even the fraud they allege cannot assist the appellants. I have pointed out that it is not a fraud; but I should point out also that even if it had been, they could not be allowed to benefit from their own fraud as they had approached the first respondent and sold the property to him when it was already attached. He must have found himself in a difficult situation when the same property he had already purchased was being offered for sale to other persons by auction yet he had paid money in order to stop its sale.

The sham bidding referred to by the appellants in their supplementary heads of argument came about because they withheld the money that he paid and did not settle with their creditor CABS.

The purpose of the first respondent attending the sale and bidding up to $3.1 million was to protect his interest, as suggested by the first appellant. It was not to purchase the property for the second time. For that reason, there was therefore no genuine or valid sale in execution.

If a different party had made a higher bid than the first respondent, then the sale would be proper and binding as such a sale would have been by an innocent and genuine party. Such sale would have superseded the sale to the first respondent.

The appellants continued to recognise the sale to the first respondent as valid up to the date of the sale in execution. That is why they asked the first respondent to come and protect his interest. They had not cancelled the previous sale. They had received money as part payment. They had not even offered to refund it.

When the first respondent made part payment it was to enable the appellants to “settle with (their) creditors”, as the first respondent put it. If the appellants had done so, the sale in execution would not have taken place. It came about because the appellants had not paid the creditor CABS.

When the first respondent applied for the cancellation of the sale in execution, no-one else objected except the appellants. CABS, the then outstanding creditor, did not object. It seems satisfactory arrangements have been made to pay CABS.

Mr Shumba, who was referred to as the next highest bidder, has not shown any interest in the matter. This is understandable, as he lost nothing and cancellation of the sale will not prejudice him in any way.

Cancellation of the sale in execution will mean that only the previous sale to the first respondent remains the proper and valid sale.

The argument by the appellants that that sale was cancelled is not correct as there was no cancellation. It cannot be said to be an illegal sale either, because if CABS had given consent that would have been the end of the matter even if it was entered into when the sale in execution was pending.

If the sale in execution is not cancelled, it simply means the appellants have the advantage of being paid more than what they had agreed to in the previous agreement of sale. I agree with the court a quo that equity requires that the sale in execution be cancelled, as the first respondent will be required to pay more while the appellants will be enriched by their own mishandling of the matter. I say “mishandling” because, firstly, when they were given part payment they should have paid their creditors but they did not, thus prejudicing the first respondent and putting his interest into jeopardy. Secondly, it is the appellants who asked the first respondent to go and bid to protect his interest. They knew that this bidding was not to purchase the property again but to protect the first respondent’s interest. They now want to benefit from that arrangement. This cannot be allowed.

Accordingly, the appellants’ appeal cannot succeed. This means that the sale by private treaty stands and, as such, they should be evicted from the property.

The end result is that the appeal fails on the two matters and it is dismissed with costs.

SANDURA  JA: I agree.

GWAUNZA JA: I agree.

Mudambanuki & Associates, appellants' legal practitioners

Robinson & Makonyere, first respondent's legal practitioners