Facts:

FirstRand bank obtained judgment against Mkhwanazi for defaulting on her loan repayments under a mortgage loan agreement.  The judgment was executed and the property sold at an auction to Shobede.

Shobede paid the deposit but thereafter seemed to lose interest in acquiring the property. She did not secure the balance of the purchase price, neither did she send the required documents to the conveyancers to enable them to draft transfer documents. She did not pay for the municipal clearance and or pay the conveyancing costs.  The conveyancers eventually issued a letter of demand, indicating that should Shobede not remedy the default, the agreement would be cancelled.  Since there was no response to this letter of demand, the sheriff brought an application to court (on instruction of the judgment creditor, FirstRand) for an order (i) cancelling the sale agreement; (ii) payment for losses sustained as a result of Shobede’s default; and (iii) costs of the application.

(Note that the application to Court in this matter was brought by the conventional, long form Notice of Motion in terms of High Court Rule 46(11).)

Held:

• Wallis J held that on the facts, it is appropriate to grant the order for cancellation of the sale.
• However, with regard to the remaining prayers dealing with the losses and costs, the Court held that Rule 46(11) was not followed.
• The rule determines as follows (our underlining):
  

“(11)

(a) 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.

(b) The purchaser shall be responsible for any loss sustained by reason of his or her default, which loss may, on the application of any aggrieved creditor whose name appears on the said sheriff's distribution account, be recovered from him or her under judgment of the judge pronounced summarily on a written report by the said sheriff, after such purchaser shall have received notice in writing that such report will be laid before the judge for such purpose.”

• The Court held that the rule clearly contemplates a summary procedure based solely on the Report by the Sheriff accompanying the Application and does not provide for a procedure by way of Notice of Motion.
• The report by the Sheriff in return should be relatively simple: it need only set out the details of the sale with which the purchaser did not comply; attach any relevant correspondence such as the letter of demand as well as the steps taken to notify the defaulting purchaser of the application for cancellation.
• If the prescribed procedure is not followed, it does not mean that the Court will not grant the requested cancellation but it does affect the costs order since it is unnecessary and unwarranted to bring the Rule 46(11) application by way of Notice of Motion. The latter is against the purpose of the Rule which envisages a short summary procedure that should not as a rule attract legal costs.
• The prayer for costs was therefore dismissed. As to the losses sustained as a result of the purchaser’s default, the court found that it was not a prayer to grant at this stage.  Only once the property is re-sold will the Court be in possession of a proper Sheriff’s report indicating what the losses are.