Nazeer Noormohamed v Alec Johannes Visser NO and Robert Schilz NO

A sale in execution of immovable property by public auction was conducted on 21 August 2001 by the second respondent's deputy (Eugene Schilz). Prior to the auction, the appellant approached Schilz and asked whether he could bid and thereafter nominate another entity as purchaser. Schilz agreed to this arrangement. The appellant's bid of R1,250,000 was the highest and the property was knocked down to him. Later the same day, instead of the appellant signing the Conditions of Sale, the document was completed with the words 'S Moosa or nominee' as purchaser and was signed by Moosa. Moosa handed over a cheque for R132,980 (representing deposit, commission and VAT) which was subsequently dishonoured. The respondent sheriffs instituted proceedings seeking to hold the appellant liable as surety and co-principal debtor for Moosa's obligations under clause 16 of the Conditions of Sale, on the basis that the appellant acted as a 'nominee' or 'trustee' within the meaning of that clause.

• Whether the appellant purchased the property as a 'nominee' or 'trustee' within the meaning of clause 16 of the Conditions of Sale
• Whether the appellant was required to sign the Conditions of Sale after assigning his rights and delegating his obligations to Moosa
• Whether the appellant could be held liable as surety and co-principal debtor for Moosa's obligations under the sale
• The nature and legal effect of the agreement between the appellant and the auctioneer prior to the auction
• Whether a purchaser who assigns rights and obligations arising from a sale at public auction falls within the ambit of clause 16 of the Conditions of Sale

The appeal was upheld with costs. The order of the court a quo was altered to dismiss the application against the appellant (first respondent in the High Court proceedings) and to make the sheriffs jointly and severally liable for the appellant's costs, with Moosa (second respondent in the High Court) to pay the applicants' costs on an unopposed scale.

A purchaser who purchases property at a public auction in his ordinary personal capacity and who is afforded the right to assign his rights and delegate his obligations under the sale does not fall within the meaning of 'nominee' or 'trustee' as contemplated in clause 16 of standard Conditions of Sale. When such a purchaser validly cedes his rights and delegates his obligations to another person who is accepted as purchaser by the seller, the original purchaser is released from his obligations and the vinculum iuris between the original purchaser and the seller ceases to exist. Consequently, the original purchaser cannot subsequently be required to sign the Conditions of Sale or be held liable as surety and co-principal debtor for the obligations of the substitute purchaser. The term 'nominee' in the context of auction sales, when used to describe a person's right to designate another as purchaser, means 'assignee' and refers to a person to whom rights may be ceded and obligations delegated, which is in accordance with established legal principle and common commercial practice.

The court noted that the practice of affording a party to a contract the right to assign rights and delegate obligations is both commonplace and in accordance with established legal principle, citing Hughes v Rademeyer 1947 (3) SA 133 (A). The court observed that 'nominee' is a word frequently used in commerce to mean different things in the legal sense depending on context. The court also noted that by reason of section 3 of the Alienation of Land Act 68 of 1981, the sale of the property was not required to be in writing and signed by the parties. The court confirmed the well-established principle that a sale by public auction without reserve is concluded as soon as the bidding closes.

This case clarifies the meaning and application of 'nominee' and 'trustee' clauses in conditions of sale at public auctions in South Africa. It establishes important principles regarding the assignment of rights and delegation of obligations arising from sales in execution, and the circumstances in which a purchaser can be held liable as surety and co-principal debtor under such conditions. The judgment affirms the established principle that sales by public auction without reserve are concluded when the bidding closes, and clarifies that a purchaser who validly assigns rights and obligations is released from the contract, with the vinculum iuris ceasing to exist. The case provides guidance on the interpretation of standard auction conditions and the rights of purchasers to assign their interests.