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[2021] ZAWCHC 37
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Stoffberg N.O and Another v Capital Harvest (Pty) Ltd (2130/2021) [2021] ZAWCHC 37 (2 March 2021)
IN
THE HIGH COURT OF SOUTH AFRICA
WESTERN
CAPE DIVISION, CAPE TOWN
Case
no.: 2130/2021
Before:
The Hon. Mr Justice Binns-Ward
In
the matter between:
NICOLAAS
EUVERHARDUS PHILIPPUS STOFFBERG N.O.
First
Applicant
ZULMIRA
FEDELIA STOFFBERG N.O.
Second Applicant
(In
their capacity as the surviving duly appointed
Co-trustess
of the KEERT DE KOE TRUST IT1909/99)
and
CAPITAL
HARVEST (PTY)
LTD
Respondent
REASONS
FOR ORDER MADE ON 3 FEBRUARY 2021
(Delivered
by email to the parties’ legal representatives and by release
to SAFLII.
The
reasons shall be deemed to have been handed down at 10h00 on
2
March 2021.)
BINNS-WARD J:
[1]
On 3 February 2021 I made an order in the
following terms in this
matter, which came before me in the fast track court in the Third
Division:
1.
The applicants’ non-compliance with the forms and
service
prescribed in the Uniform Rules of Court is condoned and the
application is entertained as a matter of urgency in terms
of Rule
6(12).
2.
The execution of the writ of execution in respect of moveable
property dated 1 September 2020 in case no. 8303/2020 is hereby
stayed until 4 August 2021, and the sale in execution
pursuant
to such writ advertised to take place at 10h00 on 3 February 2021 is
hereby cancelled.
3.
The applicants are ordered to pay the respondent’s
costs of
suit, including the wasted costs incurred up to and including 3
February 2021 in respect of the aborted execution of the
writ of
execution.
4.
Written reasons for this Order will be handed down in
due course.
As
adumbrated in paragraph 4 of the order, these are my reasons for
making it. Their provision was unfortunately delayed because
the court file was detained for more than three weeks by the typists
responsible for typing up the court’s orders. The
file
was returned to my chambers only on 24 February, and the length
of the interval since I had last dealt with it meant
that I had to
take time to refresh myself on the facts.
[2]
The applicants, who are the surviving trustees
of the Keert de Koe
Trust (‘the Trust’), applied as a matter of urgency to
stay the sale in execution of a herd of
dairy cows and certain
farming equipment. The sale was advertised to take place at
10h00 on 3 February 2021. The application
to cancel the sale
and stay the execution of the writ of execution was brought
immediately before the auction proceedings were
due to commence.
This was because, in the circumstances I shall describe presently, it
was only appreciated at a very late
stage that the respondent would
not agree to defer execution. It was therefore necessary for me
to issue an order that was
telephonically conveyed to the sheriff
conducting the sale in execution directing that the auction not
proceed until the application
was determined later in the morning.
[3]
The Trust, which conducts a dairy farming
business, is a judgment
debtor of the respondent. The judgment was obtained by reason
of the Trust’s failure to redeem
two loans to it by the
respondent. There had been a long history of abortive
arrangements between the parties to obtain the
repayment of the loans
before the respondent eventually took judgment against the Trust and
proceeded to execute it. It was
clear that the respondent had
endeavoured to be as accommodating as a reasonably possible of the
Trust’s business difficulties,
but that it had run out of
patience.
[4]
The application was opposed. It was
not suggested that there
was anything amiss with the judgment that the respondent had
obtained, or that it was susceptible to being
rescinded or overturned
on appeal. The applicant merely contended that in the peculiar
factual circumstances, which I shall
describe presently, real and
substantial injustice would be wrought were execution of the judgment
not temporarily stayed.
[5]
The respondent is a registered credit provider.
It carries on
business in the provision of credit to agricultural enterprises.
The judgment debt was incurred in respect
of two credit agreements
entered into between the Trust and the respondent in June 2017.
The last instalment payment made
by the Trust in redemption of the
debt was effected as long ago as 5 December 2018. The
Trust indicated that it intended
to sell some of its property to
redeem the debt. The respondent alleged that the intention was
to sell the land to a developer,
but the project came to nought
because the Trust’s asking price was too ambitious. The
respondent considers that it
was given the ‘run around’
for a period of about two years. Action was instituted against
the Trust for payment
of the then outstanding amount of R5 035 498.78
in July 2020.
[6]
The Trust applied during 2020 for permission
in terms of the
Subdivision of Agricultural Land Act 70 of 1970 to subdivide one of
its farms so as to be able to sell off the
subdivided portion and use
the proceeds to settle the respondent’s claim. Permission
for the subdivision was granted
on 5 October 2020. A deed of
sale, in terms of which the trustees of the Jan Cloete Trust agreed
to purchase the portion
for R11 million, was executed on 14
January 2021. The Jan Cloete Trust has since paid the sum of
R5,5 million,
which is the deposit in terms of the deed of
sale. The money has been paid into the appointed conveyancer’s
trust account
to be held there pending transfer. Bond finance
for the payment of the balance of the purchase price has reportedly
been
procured from Absa Bank, at least in principle. The
respondent has not, however, been provided with sufficient financial
guarantees that its claim will be a first charge on the proceeds of
the sale, but it is the mortgagee and transfer cannot be given
until
its interest in receiving payment has been adequately secured.
[7]
The validity of the sale agreement is questionable
because at the
time it was concluded the Trust had only two trustees, whereas the
trust deed requires that there at all times be
no less than three
trustees and that should the number fall below that the remaining
trustees have no authority to act save in
respect appointing a
successor trustee or to preserve the assets of the Trust. The
vacancy on the board of trustees was occasioned
by the death of one
of the trustees on 18 October 2020. Delays have been
experienced in obtaining letters of authority for
the substitute
trustee.
[8]
Notwithstanding the difficulty with the formal
validity of the sale
agreement, there is no doubting the earnestness with which the
purchaser entered into the transaction and
the likelihood that it
will remain committed to the transaction. That follows, in my
view, from its payment of the 50% deposit
on the purchase price.
There is also no reason to doubt that the trustees of seller trust
will confirm the agreement once
they are again quorate. The
difficulty occasioned by the Trust having been short of a trustee
when the deed of sale was concluded
was only appreciated when the
applicants consulted with counsel on 2 February 2021 for the purpose
of drafting the papers in the
current application.
[9]
The respondent contends that there is nothing
to prevent the
purchaser demanding repayment of the deposit because the trustees
lacked authority to sell the property. That
is true. But
if it were to happen, and it were to become clear that the sale had
fallen though, there would be nothing to
prevent the respondent from
thereupon applying for a cancellation of the stay of execution.
The grant of a stay of execution
is in the nature of an interlocutory
order that a court would be at liberty to revisit on new facts.
[10]
The applicants averred that the property that has been attached,
and
was the subject of the advertised sale in execution, is the Trust’s
dairy herd and the ‘milking apparatus’
used to milk the
cows. It was averred that the dairy herd is a crucial source of
income for the Trust, without which it would
be unable to profitably
conduct its operations on its remaining farmland. The
applicants testified that the sale in execution
would accordingly
have ‘disastrous financial consequences, including that the
Trust will have to retrench all 23 of its permanent
employees that
are engaged in its milking operations (each of whom supports a family
residing on the Trust’s other farms)’.
[11]
Upon being apprised of the sale to the Jan Cloete Trust, the
respondent’s
attorneys were instructed to advise the applicant
Trust’s conveyancers of the bond cancellation figure and to
inform that
the latter of the respondent’s requirements for
their consent to the cancellation of the mortgage bonds. Those
requirements
were conveyed in an email letter from the respondent’s
attorneys to the applicants’ conveyancers, dated 26 January
2021. The respondent required the issue of the following
guarantees in its favour: a guarantee in the amount of R5 389 111.24
plus interest thereon from 31 December 2020 in respect of the
settlement of the debt owed in terms of the first of the
aforementioned
credit agreements and R656 139.24 plus interest
in respect of the second credit agreement.
[12]
In response to the aforementioned letter of 26 January, a guarantee
in favour of the respondent’s bankers in the amount of R5,5
million was issued by Grindrod Bank on 1 February 2021.
The
respondent’s attorneys thereupon addressed a letter to the
applicants’ conveyancers that was emailed at 4:35 pm
on 1
February 2021 in which they pointed out that the guarantee that had
been furnished did not cover the full amount of the respondent’s
claim and referred to the telephonic advice provided by the
applicants’ conveyancer earlier in the day that a bond was to
be obtained from Absa Bank, from which the balance owing to the
respondent would be settled. The respondent’s attorneys
had been informed that attorneys Laas & Scholtz had been
instructed to register the bond. The applicants’
conveyancers
were requested to ascertain as a matter of extreme
urgency ‘what the status of their bond instruction is at this
stage and
what outstanding requirements they have before they would
be in a position to issue us with a bank guarantee in respect
of
the outstanding balance owed to our client’. The
letter proceeded ‘We also confirm our advices that our client
will only be in a position to make a final decision with regard to
the sale in execution scheduled for Wednesday the 3
rd
instant upon receipt of the aforesaid information’.
[13]
The applicants’ conveyancer says that he did not receive the
email. No information was provided from attorneys Laas &
Scholtz. By the time the current application was launched,
no
further information had been provided to the respondent in respect of
the provision of an additional guarantee in respect of
the balance of
the judgment debt.
[14]
So much for the factual context of the proceedings. The
application
was brought in terms of rule 45A of the Uniform Rules,
which provides:
‘
The
court may suspend the execution of any order for such period as it
may deem fit.
’
[15]
Mr
White
, who appeared for the respondent, relied on the
judgment of Davis J in
Firm Mortgage Solutions (Pty) Ltd and
Another v Absa Bank Ltd and Another
2014 (1) SA 168
(WCC), to
argue that unless there was a basis to believe that there might be an
inherent flaw in the judgment that was being executed
or the ‘causa’
of the respondent’s claim, the court lacked any authority under
rule 45A to suspend the execution
of the judgment. It would
appear that Davis J proceeded on an acceptance that ‘
the
basic principles for a grant of a stay in execution
’ were
expressed in the judgment of Waglay J in
Gois t/a
Shakespeare's Pub v Van Zyl and Others
2011 (1) SA 148
(LC) at
para 37, where the learned judge held:
The
general principles for the granting of a stay in execution may
therefore be summarised as follows:
(a)
A court will grant a stay of execution where real and substantial
justice requires it or where injustice
would otherwise result.
(b)
The court will be guided by considering the factors usually
applicable to interim interdicts,
except where the applicant is
not asserting a right, but attempting to avert injustice
.
(c)
The court must be satisfied that:
(i)
the applicant has a well-grounded apprehension that the execution is
taking place at the instance
of the respondent(s); and
(ii)
irreparable harm will result if execution is not stayed and the
applicant ultimately succeeds in establishing
a clear right.
(d)
Irreparable harm will invariably result if there is a possibility
that the underlying causa may ultimately
be removed, ie where the
underlying causa is the subject-matter of an ongoing dispute between
the parties.
(e) The court is not
concerned with the merits of the underlying dispute - the sole
enquiry is simply whether
the causa is in dispute.
(My
underlining for highlighting purposes.)
[16]
Davis J held, in para 12 of
Firm Mortgage Solutions
, that
the ambit of the judicial discretion in terms of Rule 45A was
circumscribed. The learned judge expressed himself in
that
regard as follows:
‘
Could
it possibly be that rule 45A envisaged the exercise of an equitable
jurisdiction unhinged from any legal causa, but simply
predicated on
the equities of a case?’
As
correctly indicated in the headnote to the report of the judgment,
Davis J gave a negative answer to the rhetorical question.
[17]
The statement of ‘general principles’ in
Gois
actually falls to be understood in three parts. Para (a)
thereof should be read discretely from the rest, and the part of
para
(b) that I have underlined has to be read discretely from the rest of
para (b) –(e). It is evident from the context
that
Davis J’s reference to ‘
any legal causa
’
was informed by paras (d) and (e) It would appear, with
respect, that the qualification in the para (b) that I have
underlined in the passage from
Gois
quoted above, as well as
the discrete character of the statement in para (a) therein, must
have been overlooked. The suggestion
that the court’s
discretion in terms of rule 45A is in any way circumscribed seems to
have been grounded on a misreading
of the statement in
Gois
.
As I shall endeavour to show, it is inconsistent with higher court
authority and, indeed, also most of the other jurisprudence
cited in
Gois
. Consideration of the cited cases shows that if
there is a ‘general principle’, it is that a court will
be inclined
to suspend the execution of a judgement if real and
substantial injustice would result if it refused to do so ( see para
(a) in
the statement in
Gois
).
[18]
The statement of ‘general principles’
in para 37 of
Gois
was
predicated on Waglay J’s review of a number of earlier
judgments, some of them preceding the introduction of rule 45A
into the Uniform Rules in 1991. The judgments referred to were
Strime v Strime
1983
(4) SA 850
(C),
Le Roux v Yskor Landgoed
(Edms) Bpk en Andere
1984 (4) SA 252
(T),
Erasmus v Sentraalwes Koöperasie Bpk
[1997] 4 All SA 303
(O) at 307D – H, and
Road
Accident Fund v Strydom
2001 (1) SA 292
(C)
at 304G – H. Most of the statement (viz. para (b) –
(e), with the exception only of the part of para (b)
that I
underlined above) was itself in large part based on a translation
from the exposition in Afrikaans by Wright J in
Erasmus
v Sentraalwes Koöperasie Bpk
supra, at
302. In that case, Wright J, having noted that an
application for the suspension of the execution of a judgment
was a
matter that fell to be decided in the court’s discretion,
suggested that ‘[b]
y oorweging van die
faktore wat in aanmerking geneem moet word by die uitoefening van die
diskresie, kan met vrug gelet word op
die vereistes vir ’n
voorlopige interdik …
’.
[1]
The learned judge then almost immediately qualified that suggestion,
saying ‘
Hierdeur word nie bedoel dat
slegs bogemelde beginsels by die uitoefening van hierdie diskresie
ingevolge Hofreël 45A nagevolg
moet word nie, en mag daar ook
ander faktore wees wat ’n rol kan speel by die vraag of ’n
lasbrief opgeskort moet word.’
[2]
[19]
In
RAF v Strydom
supra, at 304E-G, Immerman AJ referred to
Wright J’s aforementioned suggestion in
Erasmus v
Sentraalwes
and remarked that ‘[t]
he analogy of interim
interdict does not
appear to be entirely appropriate in the
circumstances of this matter. For one thing the applicant is not
asserting a right in the
strict sense but a discretionary indulgence
based on the apprehension of injustice. The Court in
Erasmus
’s
case was nevertheless at pains to point out that it was not laying
down that only the principles relative to an interim
interdict had to
be followed in the exercise of a discretion under Rule 45A. It
stressed that other factors might play a role in
the question as to
whether a writ should be suspended
’.
[20]
Immerman AJ proceeded to express his understanding of the import
of rule 45A as follows at p. 301A- C of
RAF v
Strydom
:
‘
This
Rule [rule 45A] provides that a Court may suspend the execution of
any order for such period as it may deem fit. The Rule itself
affords
the Court a discretion of the widest kind and imposes no procedural
or other limitations or fetters on the power it confers.
Grounds
on which a Court may exercise the discretion are that the causa of a
judgment is being impugned or that execution of the
judgment is being
sought for improper reasons, as correctly contended on behalf of the
respondent. However, the Court's discretion
under Rule 45A cannot be
limited by postulating that it can be exercised only in these
circumstances (see
Whitfield v Van Aarde
([1993 (1)
SA 332 (E)]
at 337F)).
Indeed, in relation to the inherent
discretion which, by reason of its power to control its own process,
a Court has to stay a writ
of execution where real and substantial
justice requires such a stay.
’
[21]
The only judgment referred to in
Gois
that might be read to
support the notion that the court’s jurisdiction to stay the
execution of a judgment was circumscribed
was
Le Roux
’s
case. That matter, however, did not involve an application to
stay execution. It entailed an exception taken
against the
particulars of claim of a judgment debtor whose property had already
been sold in execution. The plaintiff in
Le Roux
sought
the setting aside of the writ in execution and the sale that had
occurred pursuant to it. One of the arguments put
up in
opposition to the exception was that the court could grant the relief
sought in the exercise of its common law discretion.
The
judgment in
Strime
(supra) was invoked in support of the
argument.
[22]
In
Strime
, Tebbutt J remarked as follows:
‘
Execution
is a process of the Court and the Court has an inherent power to
control its own process subject to the Rules of Court.
It accordingly
has a discretion to set aside or stay a writ of execution (see
Williams v Carrick
1938 TPD 147
at 162;
Graham
v Graham
1950 (1) SA 655
(T) at 658;
Cohen v
Cohen
1979 (3) SA 420
(R) at 423D - C). The Court will,
generally speaking, grant a stay of execution where real and
substantial justice requires such
a stay or, put otherwise, where
injustice would otherwise be done
.’ (at p.852A-B),
and
(at p. 852F-G)
‘
Execution
should … generally be allowed unless the applicant for a stay
shows that real and substantial justice requires
that such a stay
should be granted (see
Rood v Wallach
1904 TS
257
at 259;
Graham v Graham
(supra at 657,
658))
.’
[23]
The matter in
Strime
entailed an application by a divorced
husband to stay the execution of a writ issued out at the instance of
his ex-wife in respect
of unpaid maintenance. The applicant
sought the stay until after the determination of his pending
application before the
Maintenance Court to have his maintenance
obligation reduced or cancelled. The court granted the stay
notwithstanding that
it was not in a position, and indeed considered
that it would be inappropriate, to assess the applicant’s
prospects of success
in the matter pending in the Maintenance Court.
It is evident from the learned judge’s reasoning, at
pp.854-855, that
Tebbutt J considered that it would be in the
interests of justice in the peculiar circumstances of the case to
grant a stay.
There was no suggestion that ‘the causa’
of the respondent’s judgment claim was in dispute (it was not)
and there
was no mention in the judgment of ‘irreparable
harm’. There was, however, the possibility that the
judgment debt
might be expunged consequentially upon a retrospective
cancellation by the Maintenance Court of the existing maintenance
order.
[24]
Ackermann J pointed out that
Strime
was distinguishable on its
facts from the case before him in
Le Roux
. He in any
event doubted the existence of a wide judicial discretion to suspend
execution. The learned judge emphasised
that none of the cases
cited in
Strime
had involved the
setting aside
of the
execution of a judgment. He did, however, consider it
significant that there was a possibility that the maintenance
debt
which was the causa for the writ of execution in
Strime
might
fall away depending on the outcome of the pending proceedings in the
Maintenance Court and appeared to think that it was
only in such
cases that a court could stay an execution of judgment.
[25]
The obiter opinion expressed in
Le Roux
that a court has only
a limited power to stay the execution of a judgment is not in accord
with later appeal court authority.
Thus, in
Van Rensburg and
Another NNO v Naidoo and Others NNO; Naidoo and Others NNO v Van
Rensburg NO and Others
2011 (4) SA 149
(SCA) at para 51-52,
Navsa JA stated the law in respect of the staying of execution
of judgments as follows:
‘
[51]
Apart from the provisions of Uniform Rule 45A, a court has inherent
jurisdiction, in appropriate circumstances, to order a
stay of
execution or to suspend an order. It might, for example, stay a sale
in execution or suspend an ejectment order. Such discretion
must be
exercised judicially. As a general rule, a court will only do so
where injustice will otherwise ensue.
[52] A court will grant a stay of execution in terms
of Uniform Rule 45A where the underlying causa of a judgment debt is
being
disputed, or no longer exists, or when an attempt is made to
use the levying of execution for ulterior purposes. As a general
rule,
courts acting in terms of this rule will suspend the
execution of an order where real and substantial justice compels such
action.
’
(Footnotes
omitted.)
It
is clear from the context that the learned judge of appeal cited
instances ‘
where the underlying causa of a judgment debt is
being disputed, or no longer exists, or when an attempt is made to
use the levying
of execution for ulterior purposes
’ merely
as examples of where the suspension of execution might be
appropriate, not as a
numerus clausus
. It would appear
that the judgment in
Van Rensburg
was not drawn to the
attention of the learned judge in
Firm Mortgage Solutions
.
[26]
The broad and unrestricting wording of rule 45A suggests that it
was
intended to be a restatement of the courts’ common law
discretionary power. The particular power is an instance
of the
courts’ authority to regulate its own process. Being a
judicial power, it falls to be exercised judicially.
Its
exercise will therefore be fact specific and the guiding principle
will be that execution will be suspended where real and
substantial
justice requires that. ‘Real and substantial justice’
is a concept that defies precise definition,
rather like ‘good
cause’ or ‘substantial reason’. It is for the
court to decide on the facts of each
given case whether
considerations of real and substantial justice are sufficiently
engaged to warrant suspending the execution
of a judgment; and, if
they are, on what terms any suspension it might be persuaded to allow
should be granted.
[27]
Whilst I had some sympathy with the respondent’s frustration
with the trustees, I was in no doubt that the respondent’s
claim was more than adequately secured and that there was little
danger that it would not be paid in full (including interest for the
delay caused by the stay). Allowing the sale in execution
to
proceed however, would destroy the substratum of the Trust’s
business and put 23 permanently engaged employees and family
breadwinners out of employment. In a country in which the
economy is under unprecedented strain and the rate of unemployment
and attendant socio-economic distress have reached crisis
proportions, I consider that real and substantial injustice would be
done if the judgment debtor were permitted to proceed with execution
of the judgment when the harm that would be caused thereby
seemed
unnecessary and eminently avoidable.
[28]
It is important though that the result of this case should not be
understood to suggest that a stay of execution should be granted upon
a mere plea
ad misericordiam
. My reservations about the
statement of principle in
Firm Mortgage Solutions
concerning
the ambit of the court’s discretion do not mean that I have any
doubt about the correctness of the result in the
very different
factual context of that case. A stay of execution is not to be
had on flimsy grounds, merely to accommodate
an alternative payment
plan that the judgment debtor might be able to offer. I think
the cases make it clear that the remedy
is not just for the asking.
[29]
The applicants sought a stay of execution until the transfer of
the
land sold by the Trust to the Jan Cloete Trust. I was not
prepared to grant the relief in those terms. One of the
respondent’s justified complaints is that the applicants have
been tardy in providing information and assurances concerning
the
required financial guarantees for payment of the full judgment debt.
I understand that this unsatisfactory situation
may endure for while,
in part due to the delays in obtaining the issue of letters of
authority from the Master’s office for
a new trustee and the
knock-on effect of that on the Trust’s and the intending
purchaser’s ability to transact effectively
with the banks, but
the respondent cannot be expected to wait indefinitely for
satisfaction of its judgment. I decided that
a six month
moratorium would meet the justice of the case. In my assessment
that should afford sufficient time for the applicants
to get the
Trust’s administration in order. They would have to make
out a stronger case than has been made out on the
papers in the
current case to justify any extension of the stay.
[30]
The applicants also sought an order for costs in the event that
their
application for a stay was opposed. In my judgment, they would
be entitled to such an order only if the opposition
to the
application were unreasonable. It was not. In the
circumstances, and as the applicants were seeking an indulgence
on
compelling grounds of equity, rather than asserting a right, I was of
the view that it would be fair and reasonable that they
pay the costs
of the application, including the costs incurred by the respondent in
opposing it.
A.G.
BINNS-WARD
Judge
of the High Court
APPEARANCES
Applicants’
counsel:
A.R. Newton
Applicants’
attorneys:
Riaan de Kock & Co. Inc
Melkbosstrand
Bellinghan Joubert Attorneys
Cape Town
Respondent’s
counsel:
J.P. White
Respondent’s
attorneys:
Mostert & Bosman
Bellville
MacRobert Inc
Cape Town
[1]
‘In weighing the factors that should be taken into
consideration in the exercise of the discretion, regard may usefully
be had to the requirements for an interim interdict’.
(My translation.)
[2]
‘By this it should not be understood that only the
aforementioned principles [ie the requirements for an interim
interdict]
should be applied in the exercise of the discretion in
terms of Rule 45A. There may be other factors that could play
a
role in the question whether a writ of execution should be
suspended.’ (My translation.)