Proceeding with Transfer where an Execution Sale Took Place prior to Sequestration or Liquidation

• Jurisdiction: South Africa
• Pages: 369-381
• Citation: (2000) 12 SA Merc LJ 369
• Published date: 25 May 2019
• Author: M Kelly
• Date: 25 May 2019

Proceeding with Transfer where an

Execution Sale Took Place Prior

to Sequestration or Liquidation

M KELLY*

University of South Africa

Introduction

When immovable property belonging to a registered owner is attached

and sold at a sale in execution but liquidation or sequestration intervenes

prior to its transfer, the execution process is not completed before the

execution creditor's claim is actually paid after the sale: Generally,

delivery of immovable property is completed by formal registration of

transfer in the Deeds Office. A seller remains the owner until such

registration has taken place. In

Simpson v Klein NO & others,

2

it is stated

that in the case of immovables, ownership in the attached property does

not pass during sale in execution, but passes later upon formal transfer of

the property by the sheriff to the purchaser.

3

In these circumstances, there is always a strong possibility that a

liquidator or trustee might attempt to abandon or declare the said

agreement void in order to attempt to obtain a higher purchase price for

the property at a subsequent sale. Cognizance should be taken of the fact

that the motivation behind the decision of a liquidator or trustee in terms

of this agreement might solely be to achieve higher remuneration

4

exclusively for his own advantage and not necessarily for the advantage

of the general body of creditors. So the primary question which falls to be

answered in this article is whether an execution creditor is precluded from

enforcing specific performance of an agreement of sale, concluded at a

sale in execution, against a liquidator or trustee, who decides to abandon

such agreement, or who declares such agreement to be void in the above

circumstances. Other questions are whether such a sale is valid, void, or

voidable, and whether a sheriff may pass transfer of the sold property in

these circumstances. Answers to these questions must be sought in the

relevant statutory provisions, case law, and common-law principles.

* Bluris LLB LLM (Unisa) Diploma in Insolvency Law and Practice (RAU). Senior lecturer in

Mercantile Law, University of South Africa.

1

See

Pols v R Pols — Bouers en Ingenieurs (Edms) Bpk

1953 (3) SA 107 (T) at 112.

1987 (1) SA 405 (W).

3

At 411B—D. See also

Liquidators Union and Rhodesia Wholesale Ltd v Brown & Co

1922 AD

549 at 559;

Shalala v Bowman NO & others

1989 (4) SA 900 (W) at 902-903.

4

See s 384(1) and (2) read with Annexure CM 104 no II of the Companies Act 61 of 1973 ('the

Companies Act'), and s 63 read with the Second Schedule Tariff B no 2 of the Insolvency Act 24

of 1936 ('the Insolvency Act').

369

(2000) 12 SA Merc LJ 369

© Juta and Company (Pty) Ltd