About SAFLII
Databases
Search
Terms of Use
RSS Feeds
South Africa: Western Cape High Court, Cape Town
SAFLII
>>
Databases
>>
South Africa: Western Cape High Court, Cape Town
>>
2020
>>
[2020] ZAWCHC 59
|
|
Changing Tides 17 (Pty) Ltd NO v Frasenburg (19353/2019) [2020] ZAWCHC 59; [2020] 4 All SA 87 (WCC) (2 July 2020)
THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISION)
JUDGMENT
Case
No: 19353/2019
In
the matter between
CHANGING
TIDES 17 (PTY) LTD N.O.
APPLICANT
And
NEAL
FRASENBURG
RESPONDENT
Coram:
Rogers J
Heard
:
17 June 2020
Delivered:
2 July 2020 (by email
to the parties and release to SAFLII)
JUDGMENT
Rogers
J
[1]
The plaintiff,/applicant,
Changing Tides 17 (Pty) Ltd N.O., seeks default judgment against the
defendant/respondent, Mr Neal Frasenburg,
on a dense suite of
agreements by now unpleasantly familiar to judges around the country
together with an order declaring the mortgaged
property specially
executable.
[2]
Summons was issued in
November 2019. No notice of intention to defend was filed. The
plaintiff delivered an application for default
judgment together with
an application in terms of rule 46A to have the mortgaged property
declared specially executable. These
applications were served on the
defendant, who filed a notice of opposition followed by an opposing
affidavit. The applications
were postponed for hearing on the
semi-urgent roll on 17 June 2020.
[3]
Although the defendant was
legally represented when the applications first served before court
on 28 February 2020 and up to the
time of the filing of his opposing
affidavit, his attorneys later withdrew.
[4]
The plaintiff seeks
judgment for R264 114,26 plus interest at the agreed rate from
14 October 2019. The defendant’s answering
affidavit does not
disclose a defence on the merits. The focus of attention is whether,
and if so on what terms, the mortgaged
property should be declared
specially executable. The mortgaged property is the defendant’s
primary residence. When summons
was issued the defendant was six
months in arrears. By the time default judgment was sought, the
arrears were R32 385, equating
to about nine months’
instalments. According to the plaintiff, the market value, local
authority value and forced sale value
of the property are R580 000,
R515 000 and R490 000 respectively.
[5]
It appears from the papers
that the defendant and his ex-wife bought the property in 1989.
Following their divorce in 2012, the
defendant purchased his
ex-wife’s half-share of the property with finance provided
under the suite of agreements previously
mentioned. The loan
agreement was concluded in March 2012 and the indemnity bond was
registered in May 2012.
[6]
In early 2016 the
defendant, following 35 years’ service with Transnet, was
dismissed. The defendant says that an unfair dismissal
case is
pending. Pursuant to his dismissal, the defendant received payment of
about R1,3 million as his accumulated pension fund
interest. On the
advice of a Nedbank investment broker, he invested R1 million with
Old Mutual in an insurance product with a five-year
term. He kept the
balance to cover his living expenses and pay sundry debts. He tried
to earn money by trading in frozen goods,
an endeavour that went well
for a time before going into decline. During 2017 and 2018 the
defendant made two withdrawals from
his Old Mutual investment, one of
which was a loan against the investment.
[7]
Until April 2019 the
defendant regularly paid the monthly instalments on his bond. The
last such instalment was paid on 28 March
2019. By that time he was
in financial difficulty. To make matters worse, the Old Mutual
investment was not performing as he had
been led to expect. He thus
tried to terminate the investment. Old Mutual refused to allow an
early termination and did not permit
any further withdrawal. (These
limitations appear to accord with the investment agreement.) The
investment will mature on 24 May
2021.
[8]
The defendant lodged a
complaint with the FAIS Ombud about the investment advice received
from the Nedbank broker. On 7 November
2019 the Ombud rejected the
complaint, finding that it was not borne out by the documentation
signed by the defendant. The defendant
applied to the Financial
Services Tribunal for a reconsideration of the Ombud’s ruling.
On 14 January 2020 the Tribunal,
per its Deputy Chairperson,
(retired) Justice L T C Harms, dismissed the
application. The defendant wishes to take
the Tribunal’s
decision on judicial review. In the meanwhile, the defendant’s
arrears were growing, leading to the
issue of summons in November
2019.
[9]
The defendant told me that
his erstwhile attorneys had made some progress in preparing the
review application. Those attorneys subsequently
ceased acting for
him (presumably for lack of funds). Several weeks ago he secured the
services of new lawyers, Simon Dippenaar
Attorneys (‘SDA’).
He had thought that they would liaise with Ms Moodley, the advocate
who appeared for him on 28 February
2020 on the instructions of his
former attorneys, and that Ms Moodley would represent him at the
hearing on 17 June 2020. He was
thus surprised to receive a message
from his new attorneys on 15 June 2020 to say that he should come to
court and represent himself.
[10]
At this point I stood the
matter down so that Mr Jonker, the plaintiff’s counsel, could
contact SDA to find out what was going
on. From Mr Jonker’s
subsequent report to me, it seems that there is some confusion or
misunderstanding as to the ambit of
SDA’s mandate. According to
Mr Kennedy of that firm, they have only been engaged to finalise and
pursue the review application.
Although the defendant told them about
the pending foreclosure proceedings, they had not accepted a mandate
to represent him in
these proceedings.
[11]
In the light of this
information, I allowed the plaintiff’s counsel to make his
submissions in support of the applications
for default judgment and
special executability. The defendant then addressed me. I explained
to him, and I believe he accepted,
that he had no defence on the
merits of the case. I also explained to him that the review
application, on which he seemed to be
pinning his hopes, had not yet
been issued and was likely to take at least six to nine months to be
heard, and that the losing
party might wish to appeal. His investment
with Old Mutual would in all likelihood mature before finality was
reached on the review
application.
[12]
I asked the defendant
whether he had considered offering his Old Mutual investment to the
plaintiff as security for the repayment
of his loan indebtedness. The
defendant said that his lawyers had not raised this possibility with
him. I can readily understand
that as a layperson he knew nothing
about this mechanism. He told me that the current value of his Old
Mutual investment is about
R800 000. I explained to him as
plainly as I could the workings of a pledge (ie a cession
in
securitatem debiti
).
Using rough figures, if by May 2021 his indebtedness to the plaintiff
had, with interest, grown to R300 000, the plaintiff
would take
this amount when the investment matured in settlement of the
defendant’s mortgage debt, and the defendant would
receive the
balance of R500 000. He would then own his house free of a
mortgage bond. The defendant indicated that he would
certainly
consider this option if it were the only way of saving his house.
[13]
In reply, the plaintiff’s
counsel, while not abandoning the application for special
executability, submitted in the alternative
that I should grant
judgment for the money debt, which would allow the plaintiff to
attach the Old Mutual investment. He submitted
that, given the
approval processes within the plaintiff’s organisation and
legal fees, the cost of attaching the investment
would be less than
the cost involved in drafting and procuring the defendant’s
agreement to a deed of pledge and would achieve
the same practical
result.
[14]
I think the plaintiff’s
counsel took it for granted that if a money judgment were granted,
and if the plaintiff were to attach
the Old Mutual investment, the
plaintiff would wait for the attached investment to mature on 24 May
2021. If that were to happen,
the attachment would indeed achieve the
same practical result as a pledge. However, following attachment it
would notionally be
possible for the plaintiff to arrange for the
attached investment to be sold in execution, and a third party might
be willing to
buy the investment for an amount sufficient to
discharge the plaintiff’s claim and yet at a substantial
discount to the true
value of the investment. This could be very
prejudicial to the defendant, but the danger could be eliminated by
an appropriate
qualification in my order.
[15]
It seems to me that the
appropriate form of attachment for the plaintiff to pursue, if it
were granted the money judgment, would
be by way of a garnishee order
in terms of rule 45(12). The Old Mutual investment is a debt owing to
the defendant even though
it is not yet due and cannot yet be exactly
quantified. It is not subject to any restrictions regarding cession
or attachment.
Service upon Old Mutual of a garnishee order would
require Old Mutual on 24 May 2021 to pay to the sheriff so much of
the matured
investment as is sufficient to satisfy the judgment debt.
[16]
The plaintiff’s
counsel, in putting forward this alternative, drew my attention to
the fact that there are full court judgments
in Gauteng and in this
division to the effect that it is undesirable, in foreclosure cases,
to deal with the money judgment separately
from special
executability. He submitted, however, that this could not be regarded
as an inflexible rule.
[17]
Before discussing these
judgments, I must clarify the following. Before the introduction of
rule 46A, it was the norm, in bond foreclosure
cases, for creditors
to seek an order declaring the mortgaged property to be ‘specially
executable’. This expression
currently has its source in rule
46(1)(
a
)(ii),
formerly in rule 45(1). In the ordinary course, and in the absence of
an order for special executability under rule 46(1)(
a
)(ii),
a creditor with a money judgment could not levy execution against
immovable property without excussing the debtor’s
movables in
accordance with rule 46(1)(
a
)(i).
Having excussed movables in terms of rule 45, the creditor did not
need the court’s intervention before executing against
the
immovable property.
[18]
Before the enactment of
rule 46A, a creditor, whether or not it was a mortgagee, was not
obliged to seek an order of special executability.
The creditor could
simply get a money judgment and follow the usual process of execution
by excussing movables, followed if necessary
by execution against
immovable property. The default position was clearly conceived of as
favouring debtors. It is of ancient origin:
it was laid down in the
erstwhile rules of the provincial divisions and pre-Union colonies
and republics; it prevailed in Holland
(Voet 42.1.42), and has its
source in Roman law (D 42.1.15.2; see also Kaiser
Roman
Private Law
3 ed
(tr
Dannenbring)
§87.I.10 at
429 and §87.III.2(a) at 433).
[19]
To allow the creditor to
bypass the default position by obtaining an order for special
executability was an advantage to the creditor
which had to be
justified. The fact that the property in question had been mortgaged
to the creditor was regarded as sufficient
justification for an order
of special executability. It is a standard provision in mortgage
bonds that upon default the mortgagee
will be entitled to claim an
order declaring the property specially executable (
LAWSA
2 ed Vol 17(2)
para 364), and the indemnity bond in the present case contains such a
clause, but even without it the hypothecation
was regarded as
sufficient justification for an order of special executability
(
Colonial Mutual Life
Assurance Society Ltd v
Tilsim
Investments (Pty) Ltd
1952 (4) SA 134
(C) at 135C;
Nedcor Bank Ltd v Kindo &
another
2002 (3) SA
185
(C);
LAWSA ibid
para 368 fn 8). However, an
unsecured creditor could also ask for and get an order of special
executability if it was justified
(
Ledlie
v Erf 2235 Somerset West (Pty)
Ltd
1992 (4) SA 600
(C).
[20]
Rule 46A does not repeal
the above general principles and the default regime contained in rule
46(1)(
a
)(ii).
Rule 46A is not concerned with special executability
per
se
but with all
instances of execution against ‘residential immovable
property’, whether specially in terms of rule 46(1)(
a
)(ii)
or ordinarily in terms of rule 46(1)(
a
)(i).
If a mortgagee of residential immovable property were simply to ask
for and get a money judgment, and then wished, after excussing
movables, to levy ordinary execution against the mortgaged property,
rule 46A would require the mortgagee to bring an application
in terms
of rule 46A. Such a mortgagee would not be seeking an order of
special executability, but rule 46A would still apply.
[21]
The default mode laid down
in rule 46(1)(
a
)
evidently exists in the interests of judgment debtors. Rule 46A,
which contains no language abrogating the default mode, has also
been
enacted for the benefit of judgment debtors; it adds an additional
layer of protection by ensuring judicial oversight in cases
of
execution against residential immovable property.
[22]
I turn now to the full
court judgments. The Gauteng judgment is
Absa
Bank Ltd v Mokebe & related cases
[2018]
ZAGPJHC 487;
2018 (6) SA 492
(GJ). The full court there held that in
bond foreclosure cases the creditor should seek its money judgment
and a rule 46A order
of executability in the same proceedings, and
that the court should hear them together. In para 13 the full
court said that
‘to grant judgment for the repayment of the
accelerated money debt and to postpone the relief to declare the
hypothecated
immovable property specially executable’ was a
course giving rise to ‘an undue protraction of the proceedings
and piecemeal
handling of the matter with a resultant increase in
costs’.
[23]
Although the full court
did not in terms distinguish between ordinary and special execution
against immovable property, para 13
suggests that the court was only
concerned with cases where a mortgagee sought an order of special
executability. In such cases
it was the invariable practice, even
before the introduction of rule 46A, for the money judgment and the
order of special executability
to come before the court at the same
time.
[24]
It seems to me that the
balance of the full court’s judgment is premised on the usual
situation in bond cases, where the mortgagee
prays for an order of
special executability together with the prayer for the money
judgment. To the extent that the full court
suggests that a bank is
compelled to seek an order of special executability, this would be a
drastic departure for which I find
no support in the new rule 46A.
Indeed, the new rule 46A seems to point in the other direction, as I
shall show.
[25]
In para 22 the full court
said that it was thus both ‘desirable and necessary’ for
the money claim and the ‘
in
rem
claim’ ‘to
be heard simultaneously’ (para 22). As I have said, the ‘
in
rem
claim’ which
the full court was considering was a claim for an order of special
executability in terms of rule 46(1)(
a
)(ii).
[26]
In para 28 the full court
said the following:
‘
We do not
deal hearing with the matter where a lender sues for money lent and
advanced and does not rely on the security of a bond.
Such lender who
abandons reliance on its security, cannot introduce it at a future
date to obtain a judgment for special executability
and its execution
will be without the benefits afforded by a mortgage bond, due to the
bar to bring matters piecemeal. The banks
argued that the unsecured
creditor is in a better position than a secured creditor because the
former is able to obtain a money
judgment without any baggage, should
the claim be pleaded correctly whilst the mortgagee has an additional
onus. The argument does
not pass muster. Rule 46A is not confined to
secured creditors. The unsecured creditor armed with its judgment
without security,
has an obligation to satisfy the court of its
entitlement to have a primary home declared executable, and not
specially, in the
same manner that is provided for in rule 46A. It
has a more onerous process to follow. This obligation arises at a
next court proceeding,
after executing against other property of the
debtor. The comparison and perceived more onerous obligation on the
mortgagee is
consequently not valid.’
[27]
If the first three
sentences of this passage mean that a mortgagee who sues for a money
judgment without asking for an order of
special executability is
thereby abandoning reliance on, and loses the benefit of, its
security, I cannot agree. The mortgagee
can plead a perfectly sound
cause of action for the payment of money without seeking to bypass
the default mode of execution laid
down in rule 46(1)(
a
).
The absence of a claim by the mortgagee for special executability
does not show an intention to abandon its security. The failure
to
seek and get an order of special executability simply means that,
although the mortgage remains in place as real security, the
mortgagee must follow the ordinary process of execution, excussing
movables before executing against the immovable property. That
this
can be done appears from an earlier full court judgment in the former
Transvaal Provincial Division: see
Gerber
v Scholtz & others
1951
(2) SA 166
(T) where, due to an oversight, the mortgagee’s
summons had not included an order declaring the mortgaged property
specially
executable. See also
Prudential
Building Society v Botha
1953
(3) SA 887
(W) where there had been a similar oversight.
[28]
Regarding the balance of
para 28 of the full court’s judgment, it is of course so that
an unsecured creditor who has obtained
a money judgment and excussed
movables will, by virtue of the new rule 46A, have to come back to
court if it wishes to execute
against residential property. A
mortgagee who has obtained a money judgment without seeking or
getting an order of special executability
is in exactly the same
position.
[29]
In para 29 the full court
said that it was the duty of a mortgagee to bring its entire case
forward in one proceeding simultaneously,
and that if the case
required postponement for whatever reason, the entire matter had to
be postponed and that ‘piecemeal
adjudication is not
competent’. The ‘entire case’ contemplated in this
paragraph appears to be the case for a
money judgment together with
an order of special executability. I have explained why I do not read
the rules as compelling the
bank to seek an order of special
executability and why failure to do so does not cause the bank to
lose its security or preclude
it from later seeking to levy execution
on the mortgaged property.
[30]
I also do not agree that
it is ‘not competent’ to grant a money judgment while
refusing (or deferring) an order of special
executability. It must
follow, from the fact that the mortgagee can seek a money judgment
without claiming an order of special
executability, that if the
mortgagee claims both forms of relief it is competent for the court
to grant the money judgment while
refusing (or deferring) the claim
for special executability.
[31]
I do accept, though, that
where an order of special executability is claimed (as it generally
is in bond foreclosure cases), the
claims for the money and for
special executability should ordinarily be disposed of together.
Indeed, it has hitherto been the
almost invariable case for such
claims to come before court at the same time. If, at such hearing,
the court requires further information
in order to make the
assessment required by rule 46A, it may well be desirable to postpone
the claim for the money judgment together
with the claim for special
executability. Similarly, if the arrears are trifling and execution
against the mortgaged property would
be disproportionate, it may well
be desirable to postpone the claim for the money judgment together
with the claim for special
executability to afford the debtor an
opportunity to regularise his or her account, or the parties time to
negotiate a rescheduling,
without having a judgment entered against
him or her. Such a course would be a matter of judicial discretion,
informed by policy
considerations arising from s 26 of the
Constitution, rule 46A and the
National Credit Act 34 of 2005
.
[32]
However, it is quite
conceivable that at such a hearing the court will find it is just to
grant the money judgment but to refuse
or defer an order of special
executability, eg where there is evidence that the debtor has other
assets from which to satisfy the
judgment. In such a case, as I see
it, the court would act quite properly, and in accordance with the
rules, by (a) granting
the money judgment (if there is no
defence on the merits) and (b) postponing or refusing the claim
for special executability,
leaving the creditor to act in accordance
with
rule 46(1)(
a
).
[33]
In
Mokebe
the banks evidently
argued that, even though the money judgment and the order of special
executability should be brought forward
as part of the same
proceedings, it did not necessarily follow that the court was
precluded, pursuant to such hearing, from granting
a money judgment
but refusing or postponing the application for special executability.
In that regard, the full court said the
following in para 23:
‘
It was argued
that
rules 46
and
46A
anticipate the possibility, though not
necessarily, of a money judgment preceding an order of executability.
However, the submission
of
rule 46(1)(a)(i)
presupposes that a money
judgment may be obtained separately from, and prior to, an order of
executability cannot be upheld. The
very fact that both the money
judgment and the order for executability are given at the same time
is not in conflict with the rule
which requires certain steps against
movables prior to execution against the immovable property. It is
purely a prior procedural
step before a writ against the immovable
property is issued. It is a step separate from the monetary judgment
and the order declaring
the immovable property executive.’
[34]
I have several
difficulties with this passage. In the first place, the contemplation
in the rules (that a money judgment may be
obtained before an order
of executability) is not located only or even mainly in
rule 46(1)(
a
)
but in the new
rules 46A(2)(
a
)(ii)
and 46A(8)(
d
).
These rules require the court to consider whether there are
alternative or other satisfactory means by which the ‘judgment
debtor’ may satisfy the ‘judgment debt’. These
expressions envisage that there may be a judgment debt without
an
order of special (or ordinary) executability. The judgment debt
contemplated in these rules is self-evidently the money judgment.
[35]
Even before the
introduction of
rule 46A
, our courts had held that in deciding
whether to grant or refuse an order of special executability, the
question whether the judgment
debtor could satisfy the debt in some
other reasonable way had to be judicially considered (
Gundwana
v Steko Development & others
[2011]
ZACC 14
;
2011 (3) SA 608
(CC) paras 53-54;
FirstRand
Bank Ltd v Folscher & another, and similar matters
[2011]
ZAGPPHC 79;
2011 (4) SA 314
(GNP) para 41). These statements clearly
envisaged that a money judgment might be granted but an order of
special executability
refused or deferred. And if a mortgagee, at the
time of issuing summons, reaches the view that the circumstances are
such that
a court will probably not grant an order of special
executability, the mortgagee must be entitled to issue summons for
the money
alone.
[36]
In the second place, and
flowing from the first point, the excussion of movables (which is the
default position, absent an order
of special executability) can only
take place if there is a money judgment. The excussion of movables is
not ‘purely a prior
procedural step’, if by this the full
court meant something that could happen without a money judgment. And
this ‘prior
procedural step’, for which a money judgment
is a pre-requisite, only has to be observed by the judgment creditor
if it has
not obtained an order of special executability.
[37]
Rule 46A
does not
contemplate that the money judgment will be withheld, and that the
creditor and debtor will explore consensual ways of
satisfying the
creditor’s claim without the need to sell the immovable
property.
Rule 46A
contemplates that the debtor will be a ‘judgment
debtor’ and that the creditor’s claim will be a ‘judgment
debt’. In most cases of foreclosure against residential
immovable property, the banks will already have engaged with the
debtors to explore consensual ways of regularising the delinquent
account before issuing summons and will have continued to do
so up to
the time of judgment.
[38]
At least in Gauteng,
Mokebe
appears
to stand as authority for the proposition that a court cannot grant a
money judgment without simultaneously granting an
order of special
executability. If it refuses or defers the latter, it must refuse or
defer the former. See, for
example,
Changing
Tides 17 (Pty) Ltd NO v Mabiletsa & others; Absa Bank v
Montwetsana
[2018
]
ZAGPJHC 605;
[2019] 1 All SA 619
(GJ) paras 2 and 29. For reasons set
out above, I respectfully regard that conclusion as wrong; it appears
to me to be inconsistent
with earlier authority, inconsistent with
the wording of
rule 46A
, and inconsistent with the range of options
open to the court in terms of
rule 46A(8).
[39]
Accordingly, and subject
to any binding authority in this division, I do not accept that a
court may not grant a money judgment
without granting an order of
executability (special or otherwise) against the mortgaged property.
I do accept, though, that where
a bank in fact seeks an order of
special executability as contemplated in
rule 46(1)(
a
)(ii),
it is desirable that such claim and the money claim should be
considered together. In the absence of grounds to believe that
the
debtor will be able to regularise the delinquent account within a
reasonable period of time or satisfy a judgment debt from
other
resources, there is no benefit to anyone in ‘postponing the
evil day’ by granting the money judgment but deferring
the
application for special executability. This will simply lead to delay
and additional cost.
[40]
The full court judgment of
this division is
Standard
Bank of South Africa Ltd v Hendricks & another and related cases
[2018] ZAWCHC 175
;
2019 (2) SA 620
(WCC). As I read the court’s judgment, it
adopted a more nuanced approach than
Mokebe
and did not associate itself with the propositions in
Mokebe
with which I have
expressed disagreement. The full court in
Hendricks
was asked to address nine questions, of which questions 3, 4 and 5
are relevant for present purposes.
[41]
In question 3 the court
was asked to consider the circumstances under which it may be
appropriate to grant a money judgment but
postpone the application to
declare the mortgaged property specially executable, given the impact
on costs and the potential for
attachment and execution of movables
in the meantime. Question 4 asked whether the court has a discretion
to decline to grant a
money judgment and whether there are
considerations to which regard should be had to ensure uniformity of
treatment in that regard.
Question 5 was whether the postponement of
an application for the money judgment under certain circumstances was
objectionable
or desirable.
[42]
In relation to these
questions, the full court held, in the first place, that the claims
for the money judgment and for an execution
order should be sought
and heard together (para 40). Having regard to the formulation of
question 3, the full court was evidently
considering the case where
the mortgagee in fact seeks an order of special executability. The
principal reasons given by the full
court for requiring the money
claim and a claim for special executability to be brought and heard
together were that it ‘creates
predictability and certainty,
reduces costs and avoids overburdening the court’ (para 38).
This procedure not only had cost
advantages but would limit
‘piecemeal adjudication’ (para 40).
[43]
The full court did not
state that a mortgagee is obliged to seek an order of special
executability, failing which it loses
its security and/or is
precluded from later seeking leave to execute against the mortgaged
property. However, the full court held
that the loan agreement
itself, and not merely the mortgage bond, has the potential to impact
the debtor’s right of access
to housing guaranteed by s 26
of the Constitution (para 48). It follows that even if a mortgagee
were to seek a money judgment
without asking for an order of special
executability, the court considering the application for the money
judgment would still
have to consider the implications of s 26
of the Constitution. Although rule 46A would not yet apply, the court
would be entitled
to insist, and should, I venture to suggest,
insist, on personal service of the application for judgment, just as
would be required
if an order of executability were being sought at
that stage.
[44]
Although the full court
said that the claim for the money and the claim for special
executability (assuming there is such a claim)
should be brought and
heard together, the court did not, as in
Mokebe
,
say that it was not competent for a court, after hearing both claims,
to grant the money judgment and dismiss or postpone the
application
for special executability.
[45]
The full court considered
an argument by the banks that courts do not have a general discretion
to postpone an application for a
money judgment where there is no
defence on the merits. It was in this context that the full court
held that, because the money
judgment (arising from the loan
agreement) has the potential to adversely affect the debtor’s
rights under s 26 of the
Constitution, the court indeed has the
power to postpone the money judgment together with the application
for special execution
(para 48). This power was described as
discretionary (para 49), to be exercised in accordance with ‘the
interests of justice’
and ‘in appropriate circumstances’
(paras 48 and 51).
[46]
I am not aware of any
other authority in this division which dictates that a court cannot
grant a money judgment if it refuses or
postpones an order of special
executability.
[47]
In the present case, the
plaintiff sued for a money judgment and for an order of special
executability. In accordance with
Hendricks
,
the claims were brought in a single summons and were simultaneously
placed before court for adjudication. If, following an assessment
of
the factors set out in rule 46A, I were to come to the conclusion
that it is not just, at least at this stage, to authorise
execution
against the mortgaged property, I would still be entitled to grant
the money judgment. If the facts relevant to a proper
assessment of
the matters set out in rule 46A were uncertain, justice might dictate
that the application for the money judgment
and the application for
special executability should both be postponed, and
Hendricks
confirms that I would
have the discretionary power to postpone the application for the
money judgment.
[48]
The full court in
Hendrick
was rightly concerned
that the granting of a money judgment while refusing or deferring an
order of special executability might
compel the mortgagee to excuss
movables in circumstances where there is no prospect of the judgment
being satisfied from the debtor’s
movables. It is notorious
that the usual household effects possessed by the ordinary judgment
debtor realise very little in execution
but are expensive to replace.
I fully agree that the withholding of an order of executability in
such circumstances is most undesirable,
since it denudes the judgment
debtor of his or her movable assets and causes him to her to become
liable for the futile costs of
levying execution against the movables
without ultimately saving his or her house.
[49]
I should add that the
potential hardship for a debtor of execution against movables is
exacerbated by the fact that s 45 of the
Superior Courts Act 10 of
2013
, which envisages that certain basic necessaries of life as
specified by regulation may be rendered immune from attachment, has
not yet been brought into operation. Despite this state of affairs,
the lawmaker saw fit to repeal the whole of the Supreme Court
Act 59
of 1959, including the protection afforded by s 39 thereof which s 45
of the new Act was intended to supersede, without
any transitional
protection for judgment debtors. The anomaly is heightened by the
fact that in the case of judgments granted in
the lower courts, such
protection has always existed, and continues to exist, by virtue of
s
67
of the
Magistrates’ Courts Act 32 of 1944
, which mirrors the
terms of the repealed s 39 of the Supreme Court Act.
[50]
The process of execution
is ultimately under the control of the court (
Graham
v Graham
1950 (1) SA
655
(T) at 658;
Strime
v Strime
1983 (4) SA
850
(C) at 852A;
Windybrow
Theatre v Maphela &
others
[2016] ZALAC 27
;
(2016) 37 (ILJ) 2641 (LAC) para 17). The seizure of the necessaries
specified in the repealed s 39 (eg beds, bedding and furniture,
wearing apparel, food and drink) may impact adversely on various
fundamental rights of debtors and their families, including their
right to human dignity (s 10), their right to food and water
(s 27(1)) and the rights of children (s 28(1)), and would
result
in irrational differentiation between judgments debtors in the higher
and lower courts. In the circumstances, and pending
legislative
regulation, it is within the court’s power, in the exercise of
its inherent jurisdiction, to decree, when granting
a money judgment,
that movables as specified in s 67 of Act 32 of 1944 may not be
attached and sold in execution in satisfaction
of the judgment, and I
venture to suggest that it would generally be desirable to do so.
[51]
In making the rule 46A
assessment, the prospect of the judgment debt being satisfied without
recourse to the mortgaged property
has to be investigated. If a
debtor is substantially in arrears and fails to place information
before court pointing to the existence
of other assets from which the
indebtedness might be satisfied, a court would generally be justified
in proceeding on the basis
that execution against the mortgaged
property is the only means of satisfying the mortgagee’s claim.
[52]
If, however, it emerges
from the rule 46A assessment that there are other assets from which
the mortgagee’s claim can be satisfied,
the court would be
justified in granting the money judgment but postponing or refusing
an order of special executability. This
is not only in accordance
with the default mode of execution which has since time immemorial
been embedded in our law; rule 46A
itself points in that direction by
requiring the court to consider whether the judgment debtor has other
means from which the judgment
debt can be satisfied and to withhold
an order of executability against the residential property if such
other means exist (rule
46A(8)(
d
)).
In such circumstances the court is not compelling the mortgagee to
seize the debtor’s proverbial pots and pans or (as
alluded to
in
Hendricks
)
the debtor’s sewing
machine. The court is instead insisting that the mortgagee execute
against other assets of substance which
are known to exist.
[53]
In the present case, I do
not regard the facts relating to the rule 46A assessment as
uncertain. The defendant has confirmed that
apart from ordinary
household goods, his only assets are the house and the Old Mutual
investment. Any income he is able to earn
is too sporadic and
uncertain to be a source from which he could ever meet his
obligations to the plaintiff.
[54]
It is not often, in bond
foreclosure cases, that the debtor has a source other than the
mortgaged property from which he or she
is able to discharge the
obligation to the creditor. In this case, however, there is such an
asset. It would not be just for the
defendant to lose a home in which
he has lived for about 40 years. He only needed mortgage finance in
2012 to buy out his ex-wife’s
half-share of the property. He
faithfully met his bond instalments until April 2019, despite the
fact that he lost his job in early
2016. He acted prudently (or so he
thought at the time) by investing R1 million with a reputable
insurance company. He is unfortunately
unable to access the balance
of this investment at the moment, but the investment will, within a
period of just under 11 months,
yield substantially more than he will
need to discharge his mortgage bond in full.
[55]
As to the money judgment,
the arrears are not trifling. As at January 2020 he was nine months
in arrears, his last instalment having
been paid on 28 March 2019. By
now he is about 15 months in arrears. By May 2021 he will be 26
months in arrears. I do not think
that it would be right to postpone
the claim for the money judgment until after 24 May 2021. If the
money judgment were withheld,
the plaintiff would not be entitled to
attach the Old Mutual investment. If the plaintiff cannot attach the
investment, its entitlement
to have its judgment satisfied from that
investment might be jeopardised if the defendant were sequestrated or
if another creditor
were to obtain judgment against him.
[56]
By granting the money
judgment, I do not place the defendant’s home in any real
peril, because all indications are that the
Old Mutual investment
will yield more than enough to satisfy the plaintiff’s claim.
Moreover, by virtue of s 23A(2)
of the Superior Courts Act 10 of
2013 (a section which came into force on 11 March 2019), the entering
of judgment against the
defendant will not be to his long-term
detriment, since once the judgment debt had been settled, he will be
entitled to have the
judgment rescinded.
[57]
Although the plaintiff
will have to wait 11 months for its money, there seems to be no
danger – if it attaches the investment
– that it will not
on 24 May 2021 receive payment in full, including the further
interest that will accrue over the 11-month
period. And the true
delay is not 11 months. If the plaintiff were granted an order of
special executability, it would not be entitled,
during the current
level of the Covid-19 lockdown, to act on the order. Once
restrictions were eased, it would take two to three
months for a sale
in execution to be held, and some weeks after that for transfer to be
passed and the purchase price paid. So
the true contrast is probably
between payment in about five months time (pursuant to special
executability) or eleven months time
(pursuant to attachment of the
Old Mutual investment).
[58]
Since this is the course I
intend to follow, it is unnecessary to deal with the reserve price
which the plaintiff put up in its
rule 46A application, save to state
that the plaintiff’s calculation was suspect in many respects.
[59]
Clause 8.2 of the
indemnity agreement contains a provision for High Court costs but as
I read that clause it applies only if the
magistrate’s court
does not have concurrent jurisdiction. In any event, costs always
remain in the court’s discretion.
Quite apart from a concern
for the interests of debtors, the High Court has its own legitimate
interest in discouraging the use
of its resources for cases that fall
within the jurisdiction of the Magistrates’ Courts. Similar
considerations apply to
clause 9 of the indemnity agreement, which
provides that the plaintiff is entitled to attorney and own client
costs. I am not bound
by, and do not intend to give effect to, that
clause. The costs reserved on 28 February 2020 and 24 March 2020 must
be costs in
the cause.
[60]
Whether a High Court has
the power to decline to exercise concurrent jurisdiction over a claim
falling within the jurisdiction of
the Magistrates’ Courts
remains an open question. I gather that the question will come before
the Supreme Court of Appeal
in the near future. However, that
recourse to the High Court in such circumstances should be
discouraged seems to me obvious. To
limit such plaintiffs to
Magistrates’ Courts costs might by and large neutralise the
burden on defendants but is hardly a
sufficient disincentive to
plaintiffs. Since this question was not raised with the plaintiff’s
counsel during argument, I
do not intend to deprive the plaintiff of
costs altogether, but it seems to me that serious consideration
should in future be given
to following such a course. Indeed, I
understand that there may be judges in this division who have already
begun to do so.
[61]
I make the following
order:
(a) Judgment is granted in favour
of the plaintiff in the amount of R264 114,26 together with interest
thereon at the rate of 10,3%
per annum, compounded monthly in arrear
from 14 October 2019 to date of payment.
(b) The defendant must pay the
plaintiff’s costs on the Regional Magistrates’ Courts
scale, including those reserved
by the orders of 28 February 2020 and
24 March 2020.
(c) The rule 46A application is
postponed
sine die
in order to allow the plaintiff to attach
the defendant’s investment with Old Mutual (Old Mutual Max
Investments Portfolio
Number 017806486 – ‘the Old Mutual
investment’) in satisfaction of the amounts owing by the
defendant to the
plaintiff hereunder.
(d) The plaintiff may not,
without the leave of the court, issue instructions for the sale in
execution of the Old Mutual investment
before 24 May 2021 but the
plaintiff may forthwith request the sheriff to act in accordance with
rule 45(12) by serving on Old
Mutual a notice requiring the latter as
garnishee to make payment to the sheriff in accordance with rule
45(12) when the investment
matures on 24 May 2021.
(e) If for any reason the
plaintiff does not on 24 May 2021 receive payment in full, or on
other good cause shown, the plaintiff
may, on notice to the
defendant, re-enrol its rule 46A application, supplemented as needs
be.
(f) The plaintiff may not cause
to be attached or sold in execution, in satisfaction of this
judgment, movable assets of the defendant
as specified in
s 67
of the
Magistrates’ Courts Act 32 of 1944
.
______________________
O L
Rogers
Judge
of the High Court
Western
Cape Division
APPEARANCES
For
Applicant
J
W Jonker
Instructed
by
Strauss
Daly Inc
13
th
Floor, Touchstone House
7
Bree Street
Cape
Town
For
Respondent
In
person