The Diamond Tool Company of Zimbabwe (Private) Limited and Another v First Merchant Bank of Zimbabwe Limited and Others

On 18 August 2002, two immovable properties belonging to the appellants were sold by public auction in execution of a High Court judgment granted on 9 January 2002 in favour of the first respondent. The Sheriff rejected the highest bid of $5,500,000 as too low and decided to sell by private treaty at not less than $16,000,000. The Sheriff accepted a price of $16,000,000 and invited objections within fifteen days. The appellants' managing director sent a letter on 3 October 2002, which the Sheriff treated as an objection. A meeting was scheduled for 24 October 2002 to consider objections, but the appellants were not represented as they claimed to have received the invitation letter on 25 October 2002. The Sheriff confirmed the sale on 24 October 2002. The appellants' legal practitioners objected on 25 October 2002, but the Sheriff advised that a court application was necessary. Transfer was effected on 29 October 2002. The appellants instituted a court application on 20 January 2003 to set aside the sale and transfer.

• Whether the application for review was instituted out of time and whether condonation should be granted for the delay
• Whether the Sheriff committed a procedural irregularity in the sale of the properties
• Whether the sale price of $16,000,000 was unreasonably low
• Whether the appropriate remedy after confirmation and transfer was review under rule 259 of the High Court Rules or restitutio in integrum
• Whether there was bad faith or fraud on the part of the Sheriff in confirming the sale and transferring the properties

The appeal was dismissed with costs.

Once a sale in execution has been confirmed by the Sheriff and transfer of the property has been effected, the appropriate legal remedy to set aside such sale and transfer is restitutio in integrum, not a statutory review under the court rules. To succeed in obtaining restitutio in integrum in such circumstances, the applicant must establish bad faith or fraud on the part of the Sheriff in confirming the sale and transferring the property. The Sheriff is not obligated to obtain the consent of the judgment debtor before accepting a price offered in a private treaty sale, provided the price is greater than the highest price offered at public auction and the Sheriff considers it reasonable. Time for instituting review proceedings begins to run when the applicant has knowledge of the material facts constituting the cause of action, not when all ancillary details become known.

The court noted that although it was not necessary to consider the merits given the finding on the delay point, it nevertheless examined them. The court observed that from the Sheriff's conduct, no inference of intention to defraud the appellants could be drawn, as the price accepted was significantly higher than the auction bid and there was no valid objection preventing confirmation at the time it occurred. The court remarked that there was "no cause, just or otherwise" for setting aside the sale and transfer, emphasizing the complete lack of merit in the appellants' case.

This case is significant in Zimbabwean law (applicable to understanding South African execution law due to similar legal traditions) as it clarifies: (1) the proper remedy to challenge a sale in execution after confirmation and transfer has occurred is restitutio in integrum, not statutory review under court rules; (2) to succeed in setting aside a confirmed sale and transfer, the applicant must prove bad faith or fraud on the part of the Sheriff; (3) the Sheriff's discretion to accept a reasonable price in a private treaty sale, particularly where it exceeds the highest auction bid, will be upheld; (4) knowledge of the material facts giving rise to a cause of action starts the running of time for instituting review proceedings, regardless of knowledge of ancillary details such as the identity of purchasers; and (5) the importance of acting timeously when challenging sales in execution.