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Who must pass transfer?

31 May 2012

SALE IN EXECUTION PRIOR TO SURRENDER OF ESTATE – WHO MUST PASS TRANSFER?
At the Conference of Registrars held in 2010, the Registrars were confronted with the question of whether the transfer of immovable property can be effected by the Sheriff where the registered owner of the immovable property subsequent to the sale in execution, but before transfer of the immovable property, published a notice of intention to surrender his/her estate, in terms of section 4(1) of the Insolvency Act 24 of 1936.

The Registrars deliberated on the judgment delivered in De Jager NNO v Balju Bloemfontein Wes en Andere (407/10) delivered by C van Zyl on 4 June 2010 and made the following ruling:

“In Dirk Cornelius De Jager No and Others v Balju van die Hooggeregshof, Bloemfontein Wes and Others dated 4 June 2010, the sale of the property is not suspended when application for sequestration is made. However, once the sequestration order has been granted, only the trustee may pass transfer subject to the provisions of section 5 of the Insolvency Act ” (see RCR 54 of 2010)

Based on the above referred to Conference Resolution, a transaction lodged at the deeds registry in Johannesburg where immovable property was sold by the sheriff, prior to sequestration, was unable to be registered into the name of the purchaser.

In the case of Edkins v Registrar of Deeds, Johannesburg and Others (16117/11) 2012 ZAGP JHC 58 dated 9 March 2012, Judge DSS Moshidi once again looked at the legal principles governing this issue and overruled the Conference Resolution and held that the Sheriff is allowed to pass transfer of the immovable property, albeit the sequestration being perfected.

The learned judge based his consideration on certain legal principles, one being Rule 46(13) of the Uniform rules which reads as follows:

“(13) The sheriff shall give transfer to the purchaser against payment of the purchase money and upon performance of the conditions of sale and may for that purpose do anything necessary to effect registration of transfer, and anything so done by him shall be as valid and effectual as if he were the owner of the property.”

The emphasis was placed on the word “shall”, which suggests that it is peremptory for the Sheriff to give transfer to the purchaser upon fulfilment of the conditions of sale.

Further emphasis was placed on the duties of the Sheriff pursuant to a sale in execution of immovable property and reference was made to the case of Goedhals v Deputy Sheriff of Albany 1913 CPD 108 where it was held as follows:

“The Sheriff reports to the Court, and the sale is then confirmed if there are no objections, in order that the property may be transferred to the purchaser. Under the Rules of Court, the duties of the Sheriff are exactly laid down. He may be liable for negligence in performing such duties, and successful actions have been brought where negligence has been proved, but so long as he follows out the Rules he is doing all that is required of him, because, as has been said, he is merely the creature of statute.”

It was further held that when the wording of section 5(1) is compared with the wording that is used elsewhere in the Insolvency Act, it becomes clear that the legislature consistently draws a distinction between the processes of execution, conclusion of an agreement of sale and transfer of property (see section 5(1); section 20(1)(c) and 34(1) read with section 34(3)). In addition, section 35 of the Insolvency Act distinguishes clearly between the conclusion of a contract for the acquisition of immovable property and where the merx has not been transferred. It is clear that if the lawmaker indeed intended to exclude the transfer of property which had already been sold in execution before the publication of the surrender notice, the lawmaker would specifically have made reference to transfer or transport thereof, specifically in the light of the wording of section 5(1) of the Insolvency Act. The words “to sell” in section 5(1), are clearly applicable to actions which would take place in future after the publication of the notice of surrender. It was not the intention of the legislature to include in the prohibition (“verbod”), property that had already been sold at the stage where publication in the Government Gazette had taken place. The wording of section 5(1) merely prohibits the sale and not the transfer of the property.

Based on the above principles it was held that the Sheriff has a duty to transfer the immovable property, irrespective of the sequestration of the owner, and in the event of the sale in execution taking place before the publication of the notice of voluntary surrender, the transfer of the property can be proceeded with. The publication of the said notice can thus effectively stop a sale in execution that has not taken place, but not the transfer of the property after the sale had taken place.

As an obiter dictum the learned judge also alluded to the weight which Conference Resolutions hold and it was held that Conference Resolutions fall under the duties of the Registrar, but cannot supersede a court’s function and discretion.

Conclusion
Given the above judgment, RCR 54 of 2010 should be suspended with immediate effect. However, as a Registrar does not have all the facts at his/her disposal to ascertain whether the sale in execution was perfected prior to the surrender of the estate and the sequestration order made, it is submitted that where the Sheriff passes transfer of immovable property emanating from a sale in execution and the registered owner is sequestrated, the Sheriff must provide the Registrar with documentary evidence that the sale was concluded and perfected prior to the sequestration (see Simpson v Klein NO and Others NO 1987 (1) SA 405 W).

This matter will be referred to the next Conference of Registrars for the withdrawal/amendment of RCR 54 of 2010.

Allen West
Deeds Training
Pretoria

Full judgment

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