1
HH 492-15
HC 6278/14
HC 6831/14
STEPHEN MUTUMHE HC 6278/14
versus
PASCAL TSUNGAI CHIVAKU MATANDA
and
PASCAL TSUNGAI CHIVAKU MATANDA HC 6831/14
versus
AGRICULTURAL BANK OF ZIMBABWE LTD
and
STEPHEN MUTUMHE
and
REGISTRAR OF DEEDS N.O.
and
SHERIFF FOR ZIMBABWE N.O.
HIGH COURT OF ZIMBABWE
MATHONSI J
HARARE, 27 May 2015 and 3 June 2015
Opposed application
A Muchadehama, for the applicant
J Dondo, for the 1st respondent
T Pasirayi, for the 2nd respondent
MATHONSI J: In HC 6278/14, the applicant (Mutumhe) filed an application against the respondent in that matter (Matanda) seeking an order for the eviction of Matanda and all those claiming through him from Stand 7390 Ruwa Township of Dispute Estate also known as 7390 Umguza Road, Zimre Park, Ruwa (the property) and costs of suit, on the basis that the property belongs to Mutumhe who holds title by Deed of Transfer No 2217/14 but Matanda remains in occupation without Mutumhe’s consent.
In HC 6831/14, Matanda made an application against Agricultural Bank of Zimbabwe Limited (Agribank) Mutumhe, the Registrar of Deeds (the Registrar) and the Sheriff for Zimbabwe (the Sheriff) seeking to nullify the attachment and sale of the property which was previously held by Matanda by Deed of Transfer number 5162/2001 but has since changed hands following its purchase by Mutumhe at an auction, the cancellation of transfer of the property to Mutumhe and the return of the property to him.
By order of this court granted on 12 March 2015, per Dube J, the two matters were consolidated for purposes of hearing at the same time. This judgement therefore disposes of both matters.
Matanda acted as a guarantee and/or surety in respect of a loan advanced to one Tapiwa Emmanuel Chengu (Chengu) who is said to be his relative, by Agribank in the sum of $65 000.00. In terms of deed of suretyship which he signed on 31 January 2011 he committed himself;
“….as surety and co-principal debtor(s) for the payment on demand of all or any such sum or sums of money which the debtor(s) may now or from time to time hereafter owe or be indebted to the said bank, its successors or assigns, whether such indebtedness is incurred by the said, debtor(s) in Tapiwa Emmanuel Chengu’s own name or in the name of any firm under which Tapiwa Emmanuel Chengu may be trading….”
As further security for the debt Matanda offered the property which he held by deed of transfer number 5162/01 in January 2011. Chengu did not pay the debt resulting in the encumbered property being sold by public auction at the instance of Agribank. Mutumhe was the lucky bidder and in due course took transfer of the property. As already stated he now holds title under deed of transfer number 2217/14, hence his bid to evict Matanda therefrom.
Not to be outdone, Matanda filed his own application seeking effectively to reverse the sale and transfer. He maintained in his founding affidavit that the sale by Agribank to Mutumhe was unlawful and unprocedural in that he had only stood as surety in respect of a sum of $65 000.00 loaned to Chengu and nothing more. According to him, Chengu paid the guaranteed debt of $65 000.000 and then took an additional loan of $70 000.00 which he did not guarantee. It is for this additional loan that the property was sold without Agribank giving him notice and without any court action being instituted against him. Agribank also failed to notify him that Chengu had defaulted as required by s 38 of the Agricultural Finance Act [Chapter 18:02] in addition to its failure to demand payment from him.
In its opposition Agribank denied the allegations made by Matanda asserting that the property was disposed of lawfully in terms of s 38 (2) of the Agricultural Finance Act [Chapter 18:02] (the Act) following failure by the debtor to settle the debt. Through Cynthia Simangaliso Ncube, its Legal Services Manager, Agribank denied that Chengu took a further loan over and above the original $65 000.00 loan. Instead it is that same loan which was rolled over several times in order to cushion the debtor from the effects of cumulative interest. Therefore the security given by Matanda remained effectual through out.
When the debtor defaulted, due process was followed in disposing of the security given. Several letters of demand were addressed to the debtor and copied to Matanda who was also called in to attend a number of meetings arranged for purposes of finding a solution to the deteriorating state of the arrears on the loan. When the process of selling the property was commenced, Southbay Real Estate, the estate agent mandated to sell it, addressed a letter to Matanda dated 4 March 2013 which reads in relevant part:
“Re: Agribank v Emmanuel Tapiwa Chengu :Stand 7390, Ruwa Township Ruwa
We have been mandated by Agribank to dispose the above property via public auction on 29 March 2013 at Raylton Sports Club corner George Silundika and Fifth Street, Harare at 10:00 am. This has arisen due to loan arrears due from Emmanuel Tapiwa Chengu to Agribank and guaranteed by yourself. You are required to deal directly with Agribank to resolve any matters you may have with the bank related to the loan arrears and the impending public auction.”
That letter was delivered at the property and signed for on 6 March 2013 by Mr Kajiva, Matanda’s neighbour. The auction may not have taken place on that date for one reason or the other but the letter communicated to Matanda the issue of loan arrears and the pending sale of the property. The probability is clearly that it was brought to his attention by his neighbour. In fact Matanda admitted in his answering affidavit that he did attend the meetings with Agribank and Chengu in which the latter promised to pay. He cannot at the same time allege that he was not notified of the default and indeed the impending auction of his property, when he even attended meetings in the company of his mother who is a sister to Chengu.
Mutumhe also filed opposition to Matanda’s application insisting that he is a bona fide purchaser who responded to an advertisement of the sale by public auction and made a successful bid, at a time when he did not know any of the parties involved. Having complied with all the formalities and taken transfer of the property, Matanda cannot seek to vindicate against him after transfer especially as, in terms of the Act, that sale is akin to a judicial sale. As no allegations of fraud, bad faith or knowledge of prior irregularities have been made against him, the application by Matanda lacks merit.
Matanda has not shown that the debt sought to be recovered by the sale of the property was not due. His attempt to suggest that the property was sold to satisfy a loan not secured by the deed of suretyship and the property, is clearly without foundation whatsoever and Agribank has, to my satisfaction, set the record straight in that regard. The question which arises therefore is whether Agribank was entitled to dispose of the property in the manner that it did and whether there was some irregularity as would vitiate the sale and transfer of the property to Mutumhe.
Agribank makes advances to persons engaged in agriculture and its functions are regulated by the Act which also provides for the establishment of schemes for the assistance of such persons and the implementation of such schemes. Therefore what Agribank can do in respect of advances, securities and remedies available are provided for by statute, in this case the Act. In terms of s 38 of the Act:
“(1) If …..
- at any time any sum of money, whether principal or interest, due in respect of an advance is unpaid; or
- ………
- ………
- ………
- ………
- there is a breach of any other condition of the advance;
the advance concerned or to which the security relates, together with any interest thereon, shall immediately become repayable to the Corporation and the Corporation may sue for and recover the whole or any part of the debt and, whether or not it sues for the debt, it may refuse to pay any part of the advance which has been approved but not yet paid:
(2) The Corporation may, in the case of an advance in respect of which security is given, including any security by way of a notarial bond or note of hand, stipulate that it shall be a condition of the advance that if any advance in respect of which security has been given becomes repayable in terms of subsection (1) the Corporation, in addition to the powers conferred by subsection (1), shall be entitled, subject to subsection (3), after a period of ten days have elapsed since the posting of a registered letter of demand addressed to the borrower at his last known address or at the address given by him in his application for the advance, to enter upon and take possession of the whole or any part of the security concerned and to dispose of such security in accordance with the Second Schedule.
(3) The Corporation shall be entitled to exercise the powers conferred upon it in accordance with any condition referred to in subsection (2) as soon as it has posted a registered letter of demand to the borrower in terms of that subsection where any event referred to in paragraph (c), (d) or (e) of subsection (1) occurs:
Provided that the Corporation shall not dispose of any security so seized until the period of ten days have lapsed since the posting of the registered letter of demand.”
Clearly therefore, when acting in terms of s 38 in taking possession and disposing of a security Agribank does not have to institute court proceedings but can dispose of the security as long as it complies with the provisions of the Act. The argument of both Matanda and Chengu that they were not sued by Agribank before the security was sold is as irrelevant as it does not take their cause anywhere. It does not prove any irregularity in the process of the sale.
Mr Muchadema for Matanda submitted that the contract of suretyship which existed between him and Agribank created obligations between them independent of those of the lender and the principal debtor. For that reason, Matanda was also a debtor of Agribank entitled to notice in terms of s 38 of the Act before the sale of the security. It was also necessary for that notice to be served in terms of that provision. He submitted that Matanda was not served with the notice and therefore the sale was a legal nullity. Relying on the pronouncement in Mc Foy v United Africa Company [1961] 3 All ER 1169 (PC) he submitted that anything premised on nothing is a nullity. Therefore the transfer to Mutumhe remains a nullity. I do not agree.
I have already adverted to the notice given by the estate agent to Matanda at his address in Ruwa, which notice was served on his neighbour. The notice was given by an authorised agent of Agribank and to insist that it had to be sent by registered post is not serious.
I am satisfied on a balance of probabilities that it found its way to Matanda. He was therefore aware that there were arrears and that the property would be sold by public auction on 29 March 2013. To say that because the sale did not occur on that specific date but sometime in August 2013, then the sale was a nullity would be to worry about form as opposed to substance, to play games with the court so to speak. What matters is that Matanda was aware of the intended sale which took place well after the expiration of the period of 10 days provided for in s 38(3) of the Act. It would be the height of turpitude to suggest that another notice should have been given to Matanda when the 29 March 2013 sale was postponed.
Mr Muchadema submitted further that the principal debtor’s notice was not delivered at his given address No. 194 Brook Drive Borrowdale Brooke Harare, but at No. 2 East Court Road, Belvedere, Harare which is not the principal debtor’s address. In my view, this is really clutching at straws. Chengu himself had an opportunity to depose to an affidavit in support of Matanda’s application. He did not say that the address is not his. In fact that affidavit betrays a very muddled thought process. It is helpful to reproduce it:
“1. I have read the founding affidavit of Pascal Tsungai Chivaku Matanda and do hereby confirm its contents to the extent to which it relates to my affairs with 1st respondent.
2. I can confirm that after I learnt from the press that 1st respondent wanted to sell the applicant’s property, I approached 1st applicant (sic). I was attended to by Mr Mpofu and Mr Chitena. Both promised not to proceed with the sale. This was after I promised to make good the loan myself.
3. I can also confirm that before applicant’s house was allegedly sold, 1st respondent did not sue me, place me in mora or notify me that they were now attaching applicant’s property for sale.
4. As at the time of the alleged sale, I do not know what I still owed first respondent. When I requested for this information, applicant’s (sic) officers were not forthcoming and kept pushing me from pillar to post.
5. I submit that applicant’s property was unprocedurally and unlawfully sold and its transfer to 2nd respondent must be reversed.”
What we know from what Chengu says is that he got to know of the intended sale, although he says nothing about the registered post that was directed to him. He made an undertaking. He expected to be sued but was disappointed when Agribank invoked s 38 of the Act. The rest of the affidavit is significant more for what it does not say than what it says. Chengu does not disown the address at which the notice was sent. Significantly, Chengu had chosen a postal address in Bromley as his domicilium citandi et executandi. There is however a letter of demand dated 15 August 2-011 which was sent to the address in Borrowdale Brooke which Matanda would have preferred. There is also evidence of several meetings which were held between the parties between May and August 2013 which have not been disputed in any meaningful way tending to suggest that the notices and demands sent out reached Chengu and Matanda who responded to them.
Therefore the claims that no notices were given are not only self-serving in the extreme but are demonstrably false. I reject the assertions that they were not notified of the state of the debt and the intention to auction the property especially as it is apparent that Matanda had sought the assistance of legal practitioners to try and stop the sale.
The procedure adopted by Agribank in auctioning the property is provided for in the Act. The Supreme Court long declared it lawful. In that regard Mr Dondo for the first respondent referred to the pronouncement made in Nyamukasa v Agricultural Finance Corporation S-124/94 and Chizikani v Agricultural Finance Corporation S-123/95 that Agribank was entitled to attach and dispose of immovable property given as security for a loan without recourse to the court as long as the procedure set out in the Act has been followed.
I conclude therefore that there was nothing irregular with the manner in which the property was sold. It has half-heartedly been argued that a fraud was committed and that Mutumhe participated in it knowingly. No evidence of such fraud or the involvement of Mutumhe beyond bidding for the property has been put forward. The entire claim remains the forlorn cry of a desperate litigant gasping for breath in a lost cause.
That process which cannot be faulted has produced a third party, who, I must say, purchased the property in good faith. He has gone further to take transfer thereby setting in motion a regime of legal principles painting a completely different shade to the dispute. Even if I am wrong in concluding that the provisions of s 38 of the Act relating to notice of the sale were complied with, the applicant will still come unstuck on the issue of transfer.
The Supreme Court was emphatic in Takafuma v Takafuma 1994 (2) ZLR 103 (S) 105 H, 106 A that:
“The registration of rights in immovable property in terms of the Deeds Registries Act [Chapter 139] is not a mere matter of form. Nor is it simply a device to confound creditors or the tax authorities. It is a matter of substance. It conveys real rights upon those in whose name the property is registered. See the definition of ‘real right’ in s 20 of the Act. The real right of ownership, or jus inre propria, is the sum total of all possible rights in a thing – see Willies Principles of South African Law 8 ed p 255.”
Mr Pasirayi who appeared for Mutumhe submitted that Mutumhe is entitled to retain not only ownership of the property but also to evict Matanda by virtue of the fact that he is the registered owner who purchased the property in good faith. He relied on the authority of Twin Wire Agencies (Pvt) Ltd v CABS 2005 (2) ZLR 34 (S) where at 36 E-G Chidyausiku CJ embraced the pronouncement of his predecessor Gubbay CJ in Mapedzamombe v Commercial Bank of Zimbabwe and Another 1996 (1) ZLR 257 (S) 260 D-261 A that:
“When the sale of the property not only has been properly confirmed by the Sheriff but transfer effected by him to the purchaser against the payment of the price, any application to set aside the transfer falls outside r 359 and must conform strictly with the principles of the common law ---. Under the common law immovable property sold by judicial decree after transfer has been passed cannot be impeached in the absence of an allegation of bad faith, or acknowledge of the prior irregularities in the sale in execution, or fraud.”
Paragraph 2 of the Second Schedule to the Act provides:
“Where a security has been seized by the Corporation in terms of subsection (2) of section thirty-eight, such seizure shall, subject to the provisions of this Schedule, have the same effect as an attachment made by the Sheriff or his deputy under a writ of execution issued by the High Court.”
Therefore the authorities I have referred to above relating to the effect of transfer after a sale by the Sheriff apply with equal force to a sale executed in terms of s 38 (2) of the Act. For the applicant seeking to set aside the sale and transfer to succeed in impeaching it, they must establish the existence of bad faith, knowledge of the prior irregularities in the sale or fraud on the part of the purchaser. In that respect Matanda has failed dismally. His application must, of necessity fail.
Having come to that conclusion it must follow that Mutumhe’s application in HC 6278/14, premised as it is, on his right of ownership I have upheld as being unimpeachable in the circumstances, must therefore succeed. This is because the owner of a property is entitled, on the basis of rei vindicatio to vindicate against the whole world. The Supreme Court made it clear in Twin Wire Agencies (Pvt) Ltd v CABS (supra) at 37D that even an application to set aside the sale does not constitute a defence against a claim for eviction by the registered owner of the property. The eviction application must therefore succeed.
In the result, it is ordered that;
- The application in HC 6831/14 is hereby dismissed.
- The application in HC 6278/14 succeeds with the result that the respondent therein, Pascal Tsungai Chivaku Matanda and all those claiming occupation through him, shall forthwith vacate Stand 7390 Ruwa Township of Dispute Estate, also known as 7390 Umguza Road, Zimre Park, Ruwa.
- In the event that they fail to do so, then the Sheriff for Zimbabwe or his lawful deputy is hereby authorised to evict them.
- The costs of both applications shall be borne by Pascal Tsungai Chivaku Matanda the applicant in HC 6831/14 and the respondent in HC 6278/14.
Mbidzo, Muchadehama & Makoni, applicants’ legal practitioners
Dondo & Partners, 1st respondent’s legal practitioners
Gill, Godlton & Gerrans, 2nd respondent’s legal practitioners
