DEPARTMENT OF TRADITIONAL AND LOCAL GOVERNMENT AFFAIRS

Investigation into the sale in execution of the property of Mr Stiphen Mkhize

Gobodo Forensic and Investigative Accounting (Pty) Ltd

Final Report

30 March 2005

7.1 We conclude that in the 9 months prior to the sale of his property, Mkhize had paid R13 329.40 towards settling his arrear rates account. After the final payment which Mkhize made to Nel & Stevens on 9 December 2003 had been credited to his rates account at the Umvoti Municipality on 16 December 2003, the outstanding balance was R 2 900.87

7.2 Whilst Mkhize had not signed a formal acknowledgement of debt document with Nel & Stevens and whilst there are contradictory claims about whether or not an oral arrangement to repay the arrear rates had been entered into between Mkhize and Nel & Stevens, in our view there can be little doubt that there was at least a tacit agreement between the parties that he would repay the arrear rates. This is evident from the regular monthly payments made by Mkhize and the acceptance of these monies by Nel & Stevens and the Umvoti Municipality.

7.3 We conclude, further, that there is no acceptable evidence to show that prior to the sale in execution on 12 December 2003, Mkhize was ever made aware of the fact that his property was to be sold in execution. This does not, however, invalidate the service of the process.

7.4 We conclude that the property was described incorrectly in the legal notices and in the conditions of sale as "66 Durban Street" whereas the correct street address is "68 Durban Street". We are advised that the incomplete description of the Erf number as "Portion 2 of Erf 470" instead of "Portion 2 (of 1) of Erf 470" is an acceptably accurate description of the property.

7.5 We conclude, further, that there has not been strict compliance with Rule 43 (6) (c) of die Rules of Court by Nel & Stevens in that the legal notices were published outside of the stipulated time period of 5 to 15 days before the sale in execution. It is possible that the sale may be set aside on this basis alone if the High Court of the Natal Provincial Division were to follow the decision in the matter of Sowden v Absa Bank Ltd 1996 (3) SA 814 (W).

7.6 We conclude, further, that it is possible that there was not full compliance with the Conditions of Sale and section 16 of the Transfer Duly Act, Act 40 of 1949 in that, in our view, N Chetty could not . have been identified to the Sheriff on the date of the sale, since he only entered the picture on 27 January 2004, some six weeks after the sale had taken place. Prior to this the property was to have been transferred into the name of Christopher Naidoo, allegedly the boyfriend of Khan (although she disputes this).

7.7. In the event that the property was in fact purchased by Khan (and not by her father), we cannot conclude that there is necessarily anything irregular about this since the property was sold at a public auction where any member of the public was free to bid for it. (In this regard see MA Mpakathi versus Kgotso Development CC and Others (Supreme Court of Appeal Case No 334/03).) However, we conclude that the decision taken by Khan on the 12 December 2003 to proceed with the sale in execution despite the recent history of substantial and regular payments to reduce his arrear rates account, was wholly inappropriate. This is further compounded by the fact that she has derived a personal benefit from the resale of this property some 8 months later and that she may have attempted to mislead her superiors, the general public and the forensic auditors appointed by the Umvoti Municipality as to who the true beneficial owner of the property was.

7.8 We conclude that there is no substance to SANCO's allegations that the Umvoti Municipality is applying its Credit Control Policy in a selective and discriminatory manner. We have reviewed all of the files to which SANCO referred and, in our view, appropriate action has been taken or is being taken in each case. These cases all have unique features and there is nothing to indicate a racially discriminatory agenda on the part of Council officials. We note, too, that since the sale of Mkhize's house, all sales in execution of property have been suspended by the Municipality.

8 Recommendations

8.1 We recommend that a copy of this report be referred to the Umvoti Municipality who, in turn, should be requested to refer it to the National Prosecuting Authority for any action they deem appropriate arising from the conduct of the Municipal officials.

8.2 We recommend that the Umvoti Municipality takes disciplinary action against Nalini Khan arising from the following conduct:-

• The wholly inappropriate decision to proceed with the sale in execution of the property despite the existence of a tacit agreement to permit Mkhize to pay off the arrear rates and despite the relatively small amount being confirmed as R2 900.87 that was still outstanding on his rates account at the date of the sale in execution;
• Dishonesty in misrepresenting to her superiors, the general public and to investigators appointed in this matter that she had signed the conditions of sale on behalf of N Chetty whereas the evidence clearly shows that the initial intention was to have the property registered in the name of Naidoo;
• Dishonesty in failing to disclose to officials at the Umvoti Municipality that she had received a benefit from the resale of the property (whether temporary or permanent) in that the proceeds from the sale of the property were used to finance the motor vehicle. This misrepresentation was repeated to the press and to the forensic auditors commissioned by the Municipality to conduct an investigation into this matter.