The Sheriff of Zimbabwe and Gull Properties (Private) Limited v CBZ Bank Limited

### Preamble
1
HH 554-18
HC 3348/17
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THE SHERIFF OF ZIMBABWE

and

GULL PROPERTIES (PRIVATE) LIMITED

versus

CBZ BANK LIMITED

HIGH COURT OF ZIMBABWE

MAKONI J

HARARE, 22 September 2017 & 19 September 2018

Interpleader proceedings

M. Moyo, for the applicant

D. Ochieng, for the claimant

T. Zhuwarara, for the judgment creditor

MAKONI J: The facts in this matter are largely common cause and they were clearly set out in the Claimant’s Heads of Argument. I will borrow heavily from those Heads of Argument.

The immovable property known as 14 Whitestone Way, Burnside, Bulawayo (hereinafter the property) was bonded to BankABC by the Judgment Debtor, David Joel Lasker, who is registered owner, as security for a debt owed by Archer Clothing Manufacturers (Private) Limited. BankABC called up the mortgage and instituted legal proceedings that resulted in the property being attached by the Sheriff of Zimbabwe.

On the 30th of June 2014, the Claimant, Gull Properties (Private) Limited and the Judgment Debtor entered into a Memorandum of Agreement of Sale wherein the Claimant purchased the property from the Judgment Debtor. This was part of and in terms of the Scheme of Arrangement referred to in paragraph 1 above.

In the agreement of sale, the parties agreed that the full price for the property would be paid by the Claimant direct to BankABC. The Claimant complied with the terms of the agreement, paid the full purchase price to BankABC, and BankABC released the property allowing Claimant to take transfer of title.

Claimant took possession of the property and has been in full control of it since.

Claimant then started the process of taking transfer of the property. In June 2014, the Claimant and the Judgment Debtor attended an interview at the Zimbabwe Revenue Authority (ZIMRA) to enable ZIMRA to assess the tax implications of the transaction wherein the property was purchased by the Claimant. ZIMRA issued its tax assessment of the transaction in September 2014, and the Capital Gains Tax was duly paid. On the 14th November 2016, ZIMRA issued a Capital Gains Tax Clearance Certificate to enable transfer of the property to Claimant.

On 8 July 2014, Claimant’s legal practitioners wrote to the City of Bulawayo seeking a Rates Clearance Certificate, which certificate was issued by the City of Bulawayo on the 7th of December 2016.

Once both the Capital Gains Tax Clearance and the Rates Clearance Certificate were issued, the documents necessary to effect transfer were lodged with the Registrar of Deeds Bulawayo. These documents included:

Power of Attorney to pass transfer

Declarations x2

Draft Deeds x2

CGT Clearance Certificate

Rates Clearance Certificate

Copy of RTGS for stamp duty

Deposit slip for the costs

Deed of transfer No. 1938/85

By 1 January 2017, the Registrar of Deeds had not processed the transfer of title in the property to Claimant, and a new Rates Clearance Certificate was demanded on the basis that the first one was only valid until the 31st of December 2016. Claimant got a new Rates Clearance Certificate, and lodged the documents for transfer with Registrar of Deeds. Transfer has not yet been effected because there are two caveats over the property, including the caveat by the Judgment Creditor pursuant to its execution, caveat number 206/16. The other caveat is 207/16.

Unbeknown to Claimant, pursuant to the order in case number HC10339/12, the Judgment Creditor had issued a writ of execution against the Judgment Debtor, obtained a nulla bona return of service from the Sheriff, and issued the writ against the immovable property. The nulla bona return filed by the Sheriff on 3 October 2016, which is the court record of this Honourable Court in case number HC 10339/12, specifically sates that it was made ‘on request’ which means that the Judgment Creditor asked the Sheriff to give it a nulla bona return. It was not give because the Sheriff failed to find movable to attach, not because the Judgment Creditor asked the Sheriff to render a nulla bona return. At the time it made that request for nulla bona, the Judgment Creditor was well aware that the immovable property had been purchased by the Claimant two years before pursuant to the Scheme of Arrangement, and that transfer was pending. In December 2016, the Judgment Creditor instructed the Sheriff of Zimbabwe to attach and sell the property was still in the Judgment Debtor’s name pending transfer, a request for transfer had already been lodged with the Registrar of Deeds.

The interpleader was opposed by the Judgment Creditor on the basis that as at the time of execution, the property was registered in the name of the Judgment Debtor David Joel Laster.

Mr Ochieng contended that the dispute between the Claimant and the Judgment Creditor had been simplified by the fact that the courts have already decided that the claimant is entitled to the property. He made reference to SC 27/17 in which the court recognised a Scheme of Arrangement in terms of which the Claimant acquired the property. The significance of that is that the Judgment Creditor is acting in bad faith and that it is well aware of the Claimant’s title as it participated in and is bound by the Scheme. The fact that title has not been changed does not invalidate the order.

Mr Ochieng further submitted the Claimant had done all that which was required to secure transfer and the equites favour upholding its claim as was done in Moyo v Muwadi SC 47/03.

In response Mr Zhuwarara submitted that in interpleader proceedings the tariff that has to be met is establishing ownership of the property. The Claimant claims to have bought the property but transfer has not been effected. Clause 3 of the agreement of sale provides,  that all risk and profit in the property shall pass to the purchaser on the date of registration. Whatever right that the purchaser acquired is personal He further submitted that the law protects the diligent and the Claimant did not act on time to protect his rights.

On being asked by the court to address the issue of the Scheme of Arrangement he submitted that there is a judgment of the court on p 7 of the record against the Judgment Debtor, Mr Laster. It is not the subject of an appeal. The issue in SC 27/17 was a cause in protection of two entities which are registered companies. The Scheme of Arrangement related to these entities and not to the Judgment Debtor. The Judgment Debtor was guarantor of the two entities who supported loans advanced to them through his own personal estate. If the Judgment debtor sold his property and failed to effect transfer that cannot stand in the way of execution sanctioned by the court.

On the issue of special circumstances Mr Zhuwarara submitted that there are no special circumstances. Special circumstances are circumstances that are not in the direct control or ability of the individual who is affected. In this case, the Claimant purchased a property in 2014. It did not expedite the transfer of the property knowing that the agreement backs nothing but personal rights. The purchaser was dilatory.

From the submissions by Mr Zhuwarara the respondent is not disputing that there was a court sanctioned Scheme of Arrangement in which the respondent participated in. He must have found himself in a very difficult situation. The Claimant addresses this issue in p 13 of his affidavit when he stated

“……At the time of attachment the Judgment Creditor was aware that the property had been sold to the Claimant. 	The Judgment Creditor must pay the cost of suit (sic).”

In its response the Judgment Creditor does not respond to the specific averment. In its para 6 where it response to para 5-15 of the Claimant’s affidavit, it goes on and on addressing the law in respect of ownership of immovable property and that that it had the right to attach and sell the property since it is still in the Judgment Debtor’s name.

That there was a Scheme of Arrangement cannot be denied. This was confirmed in Phillip Ndlovu NO v Commercial Bank of Zimbabwe and Anor SC 27/17. Although the court in matter was dealing with a different issue, it confirmed that there was an inter creditor agreement entered into by the Judgment Creditor, BancABC Botswana Limited, Interfin Banking Corporation Limited, Kingdom Bank Limited and Archer Clothing Manufacturers (Pvt) Ltd. This agreement related inter alia, to the property in issue and resulted in the Claimant acquiring this property.

Two points came out of this. The Judgment Creditor participated in and is bound by the Scheme of Arrangement. Section 191 (2) of the Companies Act [Chapter 24:03] provides that if the majority of creditors or members agree to any compromise or arrangement, the compromise, shall, if sanctioned by the court, be binding on all the creditors or members and the company and if in liquidation the liquidator. The above section was put in place for the court to superintend over Schemes of Arrangements to avoid the chaos that would result if creditors were left to freely scramble competitively for the troubled companies assets. It was to avoid the situation in casu.

The second point is that when the court grants the order, it makes the Scheme its own. In granting such an order it does not simply rubber stamp what the creditors have decided but inquires into the wisdom of it and then issues an order. The order that the Judgment Creditor obtained against the Judgement debtor was obtained well after the sanctioning of the Scheme of Arrangement. That order is still extant. The Judgment Creditor was aware of it and one is constrained to think that it was acting in bad faith. In asking the applicant to execute against the judgment debtor’s property.

I would agree with the other argument advanced by the Claimant that there exist special circumstances in this matter warranting the grant of the Claimant’s claim. Mr Zhuwarara was correct in defining special circumstances as circumstances beyond the control or are not in control; or ability of the individual who is affected.

In casu the Claimant and the Judgment Debtor entered into an Agreement of Sale on 30 June 2014 and he immediately took occupation. In July they attended at Zimbabwe Revenue Authority (ZIMRA) to enable it to do the requisite assessment for tax purposes. ZIMRA issued its Tax Assessment on 30 June 2016 and The Capital Gains Tax Clearance Certificate on 14 November 2016. The City of Bulawayo issued the Rates Clearance Certificate on 7 December 2016. It was valid until 30 December 2016.

Thereafter the documents to effect transfer were lodged with Deeds Office by 1 January 2017, the Deeds Office had not processed the transfer. It then demanded a current Rate Clearance Certificate. On 11 January 2017 the Claimant’s legal practitioners wrote to the City of Bulawayo requesting for a current one.

As this was happening, the Judgment Creditor instructed the applicant to attach the property and it did so on 24 November 2016.

It is my view that the Claimant had done all that was required of  it to ensure that it gets transfer. What remained to be done was beyond its direct control or ability.

In view of the above, the claimant has made out a case to have the property released from attachment.

In the result, I will make the following order:

The Claimant’s claim to the property placed under attachment in execution of judgment HC10339/12 is hereby granted.

The immovable property attached in terms of Notice of Attachment of Immovable Property dated 17th November 2016 issued by the applicant is hereby declared not executable.

The Judgment Creditor is to pay the Claimant and applicant’s costs.

Dube-Banda Nzarayapenga & partners, applicant’s legal practitioners

Coghlan Welsh & Guest, claimant’s legal practitioners

Mawere & Sibanda, judgment creditor’s legal practitioners