Can a car sold under finance, or a suspensive condition be attached and sold in execution by a Sheriff?
One of the primary duties of a Sheriff is to attach and sell in execution, property of a judgment debtor in accordance with a court order granted against the latter. Even so, the Sheriff can only attach and sell property that is owned by a judgment debtor, not property merely in their possession. This begs the question of whether a car sold under finance or a suspensive condition in terms of which ownership will
be transferred to the purchaser on full payment of the purchase price can be sold in execution where the purchaser is a judgment debtor. In an attempt to untangle this issue, the provisions of the National Road Traffic Act 93 of 1996 (the Act) provide clarity by defining the terms ‘title holder’ and ‘owner’ in relation to a motor vehicle.
Title holder and owner
In the definitions section of the Act, ‘owner’ in relation to a motor vehicle means:
‘(a) the person who has the right to the use and enjoyment of a vehicle in terms of the common law or a contractual agreement with the title holder of such vehicle;
(b) any person referred to in paragraph (a), for any period during which such person has failed to return that vehicle to the title holder in accordance with the contractual agreement referred to in paragraph (a); or
(c) a motor dealer …’.
The word ‘title holder’ is defined as meaning:
‘(a) the person who has to give permission for the alienation of that vehicle in terms of a contractual agreement with the owner of such vehicle; or
(b) the person who has the right to alienate that vehicle in terms of the common law, and who is registered as such in accordance with the regulations under section 4.’
The Gauteng Division of the High Court in ABSA Bank Ltd v Van Eeden and Others 2011 (4) SA 430 (GSJ), per Willis J, simplified the above definitions as follows: A ‘title holder’ is ‘the person whom lawyers would ordinarily call the owner’, and the ‘owner’ as ‘the person whom lawyers would ordinarily call the bona fide possessor, the person who drives around in the vehicle as if owner and who is looked to for payment of fines, licenses, etc.’ From this illustration, it is clear that the client is the owner of the vehicle and the judgment debtor is the bona fide possessor thereof.
The attachment process and effects of a sale in execution
Before the Sheriff can attach and proceed to sale in execution of a motor vehicle, they must first ascertain whether the vehicle is subject to an instalment sale or suspensive condition. This is to ensure compliance with reg 53 of the National Road Traffic Regulations, 2000 and to eliminate the possibility of having the sale in execution set aside by a court of law. This regulation provides that:
‘No person shall, either for himself or herself, the State or on behalf of another person –
(a) dispose of or deliver or trade with a motor vehicle unless –
…
(ii) the registration certificate, and if the motor vehicle is required to be licensed, the motor vehicle license, accompanies the motor vehicle concerned.’
The object of this provision is to protect the interests of all parties who have an interest in the vehicle, particularly the title holder, and to promote commercial sanity.
In addition, if the title holder and the owner are not the same person, and the latter is a judgment debtor, the Sheriff is obliged to effect service of a notice of attachment and warrant of execution on the title holder. This is a requirement of r 42(2) of the Rules Regulating the Conduct of the Proceedings of the Magistrates’ Courts of South Africa (GNR 740 GG33487/23-8-2010) (the Magistrate’s Courts Rules). Rule 42(2), which provides as follows:
‘(2) Where the movable property sought to be attached is the interest of the execution debtor in property pledged, leased or sold under a suspensive condition to or by a third person or is under the supervision or control of a third person –
(a) attachment shall be effected by service by the sheriff on the execution debtor and on such third person of notice of the attachment with a copy of the warrant of execution, which service may be effected as if such notice was a summons: Provided that where service cannot be effected in any manner prescribed the court may make an order allowing service to be effected in the manner stated in the order; and
(b) the sheriff may, upon exhibiting the original of such warrant of execution to the pledgee, lessor, lessee, purchaser, seller or such other third person, enter upon the premises where such property is and make an inventory and valuation of the said property.’
A plain reading of r 42(2) obliges the Sheriff effect service of a notice of attachment and warrant of execution on the title holder of the vehicle before proceeding to attach it. This step, however, ought to be preceded by an inquiry into whether the vehicle is subject to any suspensive condition which relates to the ownership and title of the vehicle.
Willis J, in the Van Eeden case at para 39, emphasised the significance of r 42(2) in the following words: ‘Sales in execution of motor vehicles by the sheriff, without at least giving notice of the intention to do so to both the “title holder” and the “owner”, as defined in the National Road Traffic Act, will undermine public confidence, not only in the system of sales in execution, but also the system of registration of vehicles provided for in the National Road Traffic Act, as well as the whole system of credit financing of vehicles and the regulatory framework of the NCA.’
Rule 42(2) must be read together with s 68(3) of the Magistrates’ Courts Act 32 of 1944, which provides that ‘the sheriff may … attach and sell in execution the interest of the execution debtor in any movable property belonging to him and pledged or sold under a suspensive condition to a third person, and may also sell the interest of the execution debtor in property movable or immovable leased to the execution debtor or sold to him under any hire purchase contract or under a suspensive condition.’
Be that as it may, a purchaser at the sale in execution does not necessarily acquire ownership of the vehicle, but merely acquires the execution debtor’s interest in the vehicle – the right to possess and enjoy the vehicle and not become owner thereof until the purchase price is paid in full (see Van Eden at para 19). In other words, where the ‘title holder’ and the ‘owner’ are separate persons, this may only entitle the Sheriff to sell the owner’s right, title and interest in the vehicle.
Conclusion
In conclusion, the Sheriff can attach a motor vehicle under finance or subject to a suspensive condition provided they comply with the procedure enumerated in reg 53 and r 42(2). Before attachment, the Sheriff must establish who is the title holder of the vehicle and effect notice of attachment and warrant of execution on him to allow him an opportunity to protect his interests. When the vehicle is attached and subsequently sold in execution, the purchaser at the sale in execution will assume the interests of the judgment debtor in the vehicle – undisturbed use and enjoyment of the vehicle and will become owner thereof when the full payment of the purchase price is paid.
