Success Auto (Pvt) Ltd and Others v FBC Bank Limited and Another

The first respondent (FBC Bank) sued the applicants for payment of US$454,874.62 being a loan advanced to them, secured by a mortgage bond over immovable property (Stand 80 Borrowdale Brook, Harare). On 13 June 2013, the parties signed a deed of settlement whereby the applicants undertook to pay the debt on certain terms. The first respondent granted consent allowing the applicants to sell the mortgaged property by private treaty within 75 days. The applicants failed to secure a buyer and defaulted on payment. The first respondent obtained judgment on 7 October 2013 and instructed the Sheriff to execute against the property. The property was sold by public auction on 5 May 2014 for US$355,000. The applicants objected to confirmation of the sale, relying on valuation reports suggesting the property was worth US$922,500 or US$945,700. After a hearing on 27 June 2014, the Sheriff confirmed the sale. The applicants then applied to the High Court to set aside the Sheriff's decision confirming the sale.

• Whether the Sheriff erred in confirming the sale where the applicants alleged the property was sold for an unreasonably low price
• Whether the valuation reports submitted by the applicants were reliable and should have been preferred over the Sheriff's independent valuer
• What is the standard of proof required to set aside a sale in execution on grounds that property was sold for an unreasonably low price
• Whether the Sheriff was required to exhaust movable property before proceeding against immovable property in circumstances where a court order declaring immovable property executable existed
• Whether an applicant can raise new grounds in oral submissions that were not pleaded in the founding affidavit

The application to set aside the Sheriff's confirmation of the sale in execution was dismissed with costs.

A party seeking to set aside a sale in execution on the ground that property was sold for an unreasonably low price bears the onus of proving this with properly supported, independent valuations reflecting upper and lower limits of market price. Valuations from agents sourced by the applicants who failed to achieve higher prices themselves over an extended period, and which conflict with the Sheriff's independent valuer, are unreliable and insufficient to discharge this onus. Once a sale is confirmed by the Sheriff in compliance with the rules, courts are reluctant to set aside such sales. In application proceedings, an application must stand or fall on the grounds pleaded in the founding affidavit; new grounds cannot be raised for the first time in oral submissions as this denies the respondent the opportunity to respond and constitutes an impermissible ambush.

The court made observations on the interpretation of Rule 326, noting that the proviso requiring exhaustion of movable property before proceeding against immovable property must be read in conjunction with the main rule. The rule applies where a judgment creditor issues one writ for both movable and immovable property without obtaining a separate order declaring immovable property executable. The court cited Govere v Ordeco (Pvt) Ltd which held that Rule 326 does not differentiate between secured and unsecured creditors and that before attaching immovable property, the Sheriff must satisfy himself that there is no or insufficient movable property. However, the court did not make a definitive ruling on whether this requirement applies where a court order already declares specific immovable property executable, as this issue was not properly before the court on the pleadings. The court also observed that property values have dropped significantly due to liquidity constraints, making inflated valuations unrealistic.

This case reinforces important principles in Zimbabwean execution law: (1) the high threshold required to set aside a sale in execution confirmed by the Sheriff; (2) the requirement for independent and reliable valuations when challenging a sale price; (3) the principle that applications stand or fall on the founding affidavit and new grounds cannot be introduced belatedly through oral submissions; (4) the court's reluctance to interfere with confirmed sales, particularly where third party purchasers have acquired rights; and (5) the importance of the Sheriff's independent valuer in assessing whether a price is unreasonably low. The judgment also discusses the interpretation of Rule 326 regarding the exhaustion of movable property before executing against immovable property, though this was not determinative.